OPEC might decide to cut oil exports, exacerbating a crisis that already saw the highest inflation in 40 years. Winter will be very cold this year.
Tomorrow, the 5th of October, representatives of OPEC (Organization of Petroleum Exporting Countries) will meet in Vienna. Many fear that they will decide on oil cuts, decreasing exports and therefore increasing prices.
This decision would come in the midst of the worst energy crisis for the West in decades, as the invasion of Ukraine started a war of gas between Russia and the European countries. Europe now braces itself for a cold winter, but another energy disaster might be looming.
If OPEC, and in particular Saudi Arabia, decides to slash oil exports it will spur inflation even higher and might blow in Joe Biden’s face. In November there will be the Mid-term elections, which will provide the definitive feedback on Biden’s presidency so far.
Joe Biden himself had declared (before the war in Ukraine) that he’d do anything he could to reduce oil imports from Saudi Arabia. The middle-eastern country, de facto ruled by the ruthless Mohammad Bin Salman, has worsened its relationship with the US after several war crimes committed in the previous years.
Mohammad Bin Salman, who took power early last decade, seemed to be the reformer of Saudi Arabia: introducing cinema in the country and allowing women to drive. His castle of cards fell when he ordered the gruesome murder of Jamal Khashoggi, a reporter of the Washington Post. The journalist was killed in Istanbul after he was lured into the Saudi consulate. His body was desecrated and dispersed.
Why Saudi Arabia wants to cut oil exports now
This happened in 2018, when at the time US President Donald Trump was in great relationship with Mohammad Bin Salman. After the Khashoggi murder, however, it became clear to the United States that Saudi Arabia could not be easily trusted. Further, the main geopolitical enemy of the US in the region, Iran, was undergoing a political and economical struggle that made it less of a threat.
With the insurgence of Biden at the White House, the hostility towards Mohammad Bin Salman became more vocal, as Biden basically announced that he’d rather use the US federal reserve of oil than being tied with Saudi Arabia any longer.
Then, Russia invaded Ukraine and suddenly the US couldn’t rely on Russian oil exports anymore. Now, Saudi Arabia has leverage to use against the United States, being the third exporter of oil in the world.
Biden might be forced to eventually use the US oil reserve, but many experts point out that it’s not a quantity big enough to be relevant. Prices could still increase if OPEC decides to cut exports, not to mention that Europe would be even more isolated energy-wise.
