China News Service, October 9 (Reporter Meng Xiangjun) Global oil has suffered the largest production cut since 2020!

On October 5th, local time, Vienna, Austria, the "OPEC+" members who held face-to-face meetings for the first time in two years decided to do a major event: from November, the total crude oil production will be reduced by an average of 2 million barrels per day.

  As soon as the decision to cut production came out, oil prices rose immediately, and many analysts believed that this marked the failure of US President Biden's "shuttle diplomacy" towards the Gulf oil-producing countries.

In the face of the new situation, the White House urgently prepares to fight back, is it too late?

US President Biden.

[Substantial reduction in production, leading to the first army]

  You must know that "OPEC+" is not a petty fight this time, but the largest reduction in oil production since the new crown epidemic, equivalent to about 2% of global oil demand.

As soon as the decision was made, international oil prices rose in response, and by October 8, it had risen for four consecutive times. In addition, the validity period of the decision may be extended to the last day of 2023. In the long run, it is difficult to predict what impact it will have.

  Who is the "OPEC+" that makes the decision?

There are 13 major oil-producing countries, such as Saudi Arabia, the United Arab Emirates, Kuwait, Algeria, Iran, Iraq, Libya, Venezuela, etc.; 10 countries with a "+" sign, Russia, Kazakhstan, Mexico, Malaysia, Azerbaijan, Bahrain, etc.

  It is very clear that the "leaders" of this group are Saudi Arabia and Russia; the goal of this operation is to protect prices and make money.

In addition, under the reality that the United States took the lead in strangling the Russian energy industry, the other role of Russia's agreement to cut production is naturally to save Russian energy and counterattack the United States and the West.

Data map: An oil facility in the Saudi coastal city of Jeddah.

  Gromov, chief energy director of the Russian Institute of Energy and Finance, pointed out why it is worth doing: ↓↓

  First, in recent months, the international oil market has been frequently in excess, and in addition to the epidemic restrictions, demand has also contracted.

  Second, "OPEC+" countries have not actually extracted enough oil, and the market has put less than the quota, even if the production cut is not announced.

  Third, the United States has actively consumed the national strategic oil reserve, releasing 1 million barrels of oil per day for several months, prompting OPEC+ to cut production.

  Fourth, it is expected that the EU oil embargo will take effect in December, and the G7 also plans to impose a price cap on Russian oil, reducing production is in Moscow’s interest.

  It has to be said that the troops will stop it, and the water will cover the soil. This time Russia joined the Gulf countries to attack the United States, which has indeed caused anxiety on the other side and caused Washington to be shrouded in frustration.

["Major Break", "Diplomatic Failure"]

  Bloomberg pointed out that the incident is a blow to the U.S. Democratic Party's midterm election prospects in November, and it has also made its relationship with Saudi Arabia and other Middle East allies more tense.

Data map: The Leondel Basel refinery in the United States.

  In order to lower oil prices before the mid-term elections to reduce inflation, in July, Biden personally "came to the door" to lobby Saudi Arabia and other countries to increase oil production.

In fact, top US energy, economic and foreign policy officials have not stopped lobbying a few days before the OPEC+ decision.

  The White House also asked U.S. Treasury Secretary Janet Yellen to personally deliver a warning to the Gulf countries' finance ministers: "If you continue to cut production, your reputation and relationships in the eyes of the United States and the West will be at great political risk."

  However, Saudi Arabia and other countries did not buy into the US's goodwill with guns and sticks.

The scene that Biden didn't want to see the most happened.

  The British "Financial Times" commented that "OPEC+"'s decision to cut production marked a "major break" between the group and the Biden administration.

The New York Times pointed out that the decision by the major oil-producing countries exposed "the failure of US diplomacy."

Data map: Offshore oil rigs in the Gulf of Mexico.

  Pirro, a commentator on Fox News in the United States, pointed out that three months ago, looking back on how Biden "couldn't please Saudi Arabia", "raised fists to greet the Middle East (countries)", and asked them to increase oil production, now "looks like a fool. ".

At the same time, drivers in the United States are "miserable when refueling" and "it's going to get worse."

[Breaking back, limited options]

  "For most voters, no personal financial issue is more important than the price of gasoline," said Blissard, a Republican pollster who pointed out that rising oil prices have exacerbated Americans' concerns about inflation, costs and "this administration's inability to control personal wallets." concerns”.

  The most critical midterm elections for Biden and the Democratic Party's "future" are only five weeks away.

Whether it is to stabilize oil prices or reduce inflation, everything seems to be too late, and production cuts may become the "last straw" to overwhelm Biden's approval rating.

  Ibish, a senior fellow at the Institute of Arab Gulf States, told Al Jazeera that Washington "doesn't really have a lot of tools to deal with this decision".

The only producers with a lot of leeway in expanding production are the Gulf countries.

On August 25, local time, a car was parked at a gas station in San Mateo County, Northern California, United States.

Photo by China News Agency reporter Liu Guanguan

  So, what options are there for the United States to fight back?

↓↓

  Option one, the US Department of Energy will continue to implement the 180 million barrels strategic oil reserve release plan, and release another 10 million barrels of war oil to the market in November.

  Option two, the U.S. could push the long-standing Anti-Oil Production and Export Monopoly Act (NOPEC) legislation.

The law would empower the U.S. government to sue OPEC+ members for billions of dollars in damages for manipulating the energy market.

  For option three, the White House calls on U.S. shale oil producers to increase supply and urges oil companies to increase domestic inventories instead of exporting more fuel.

  For option four, the White House believes that with the passage of the Inflation Reduction Act, the United States can increase its dependence on clean energy and its own energy technologies while reducing its dependence on external fossil fuels.

However, this is obviously "far can't quench near thirst".

  Some observers believe that these measures are meaningless. If it wants to exert "real pressure" on the major oil producers in the Gulf, Washington should start with withholding some security aid and military cooperation.

  Al Jazeera quoted expert analysis as saying that the truce in Yemen expired earlier this month, and Saudi Arabia may be attacked by missiles and drones by the Houthis.

As Saudi Arabia's security guarantor, Washington has a certain influence, and some U.S. lawmakers have called on the government to use this to influence Saudi Arabia's energy policy.

FILE PHOTO: Yemen's Houthis attacked an oil facility in Jeddah, Saudi Arabia.

  Three Democratic U.S. lawmakers are preparing to introduce a bill to withdraw all U.S. troops and missile defense systems from Saudi Arabia and the United Arab Emirates.

  Ibish believes that the security and military cooperation between Washington and the Gulf countries is mutually beneficial, and any withdrawal will cause the United States to "suffer" as much as the other side.

Therefore, it is difficult for the United States to use these tools in the short term.

  In addition, Ibish predicts that the geo-strategic situation could change completely with the arrival of winter.

Cutting fuel supplies would mean real economic and social misery for millions of people in Europe, potentially changing the calculations of some parties.

  Putting a price cap on Russian oil exports appears to be one of the "necessary" measures.

The OPEC+ decision to cut production comes just hours after EU countries agreed to the U.S. plan.

The analysis pointed out that Gulf countries are worried that the plan will drive down oil prices across the board and may even be used against themselves in the future.

  The production cut shows OPEC's dissatisfaction with the West's settling of an oil price cap.

(Finish)