HomeMediaLatest NewsWill Biden manage to bring down oil prices during his Middle East tour?

Will Biden manage to bring down oil prices during his Middle East tour?

15 July 2022

Belogoryev Alexey M. Deputy Principal Director on Energy Studies, Director of the Center for Energy strategic analysis and forecasting

Alexey Belogoryev, Deputy Principal Director on Energy Studies of the Institute for Energy and Finance, commented to Free Press how effective Biden's trip to Saudi Arabia could be.

As the source of "Free Press" notes, the opinion of many experts and politicians that Saudi Arabia and the United Arab Emirates have the largest oil production capacities is erroneous.

“In fact, there is no such capacity that could be used promptly. That is, in half a year something can be put into operation, but right now, in one or two months, to seriously increase production, there are no such opportunities physically. In particular, Saudi Arabia attributes to itself free capacities of one and a half to two million barrels per day. But in reality, some of this production capacity has already been brought into production during the post-COVID recovery under the OPEC Plus agreement. In addition, the very availability of capacities is, in fact, a “black box”, because there is no international audit, and therefore, whether they exist or not, in what condition is a question that no one except Saudi Aramco knows the answer to,” the economist says.

At the same time, as he notes, Biden’s calculation was precisely on these capacities: “The Biden administration proceeded from the fact that the Saudis would be able to throw large volumes onto the market - at least a million, or even one and a half to two million barrels daily. But, apparently, the maximum that Saudi Arabia can do is to increase production, giving an additional 300,000 barrels per day. However, the emergence of such a volume for the market will be almost imperceptible.

And therefore, according to the expert, no revolutionary breakthrough should be expected from Biden's Middle East tour:

“Basically, the President of the United States is left with two options. Either lift sanctions on Iran, but then the problem of Iran may be part of the negotiations with Saudi Arabia, because Saudi Arabia and Israel are ardent opponents of lifting sanctions and returning to a nuclear deal. However, even if America removes sanctions from Iran, it will increase exports by the same million and a half million barrels per day. And it is more important for Saudi Arabia to increase its exports. And the second possibility is the preservation of exports from Russia.”

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