OPEC+ Cuts Focus on Prices in Pre-Midterm Blow for Democrats

(Bloomberg) — Saudi Arabia’s support for a surprise OPEC+ oil production cut a month before the U.S. midterms is a blow to Democrats’ election hopes and further strains an alliance that was once a cornerstone of the nation’s Middle East diplomacy.

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Although analysts expect only modest increases in the price of gasoline in the coming weeks, public attention is once again focused on the flashpoint of consumer anger regarding the rising cost of living with the oil cartel move. Steady reductions in pump prices since June are already on the horizon, with the national average retail price rising 19 cents a gallon since September 19 to $3.87.

The rise in gasoline prices, a result of tight inventories rather than OPEC+ actions, comes just as voters prepare to cast ballots that will determine which party will control Congress for the next two years. It’s bad news for Democrats, who hold only the narrowest of majorities in the House and Senate and are trying to fend off Republican attacks that have blamed them and President Joe Biden for inflation.

“There is no personal financial issue that is more consequential for most voters than gas prices,” said Republican pollster Robert Blizzard. “Gas prices are rising, which is a challenging position for any Democrat on the ticket because it reinforces concerns about inflation, costs, and the inability of this administration to get personal pocketbook issues under control.”

Rob Thummel, senior portfolio manager at TortoiseEcofin, said in an email that he expects average national gasoline prices to rise to $4 a gallon or higher next month. He said he did not expect the OPEC+ decision to significantly increase oil prices, which often results in higher gasoline prices in the short term.”

Still, the timing of the OPEC+ decision angered congressional Democrats, many of whom already consider Saudi Crown Prince Mohammed bin Salman a dictator and human rights abuser who they hold responsible for the killing of journalist Jamal Khashoggi.

“The Saudi royal family has never been a trusted ally of our nation,” tweeted Dick Durbin, the second-ranking Democratic leader of the Senate. “It is time for our world foreign policy not to imagine their alliance.”

Within hours of the OPEC+ announcement, three swing-district Democrats — Tom Malinowski of New Jersey, Susan Wild of Pennsylvania and Sean Casten of Illinois — said they planned to introduce a bill to defund all US troops and missile defense systems. removed from Saudi Arabia and the United States. The United Arab Emirates, another OPEC member supported the production cuts.

“This decision is a turning point in our relationship with our partners in the Gulf. If Saudi Arabia and the UAE hope to maintain a relationship with the United States that has been extremely beneficial to them, they must demonstrate a greater willingness to work with us — not against us,” they said in a statement.

Durbin and Republican Senator Chuck Grassley of Iowa called for the revival of the legislation, which had bipartisan support, which would allow the US to take the dramatic step of suing the Organization of the Petroleum Exporting Countries for manipulating the energy market , and could seek billions of dollars i. compensation.

Other Democrats also expressed anger at the Saudi role.

“The United States should make it clear that if the Saudis do not reverse their decision within five days, we will stop supplying them with parts of their air force, we will stop selling them weapons,” California Representative Ro Khanna said. an interview. “They continue to mow down the American people, we’re not just going to sit by and let them do this.”

Biden said he is disappointed by OPEC+’s surprise decision, but doesn’t regret a trip he made to Saudi Arabia just three months ago where he urged their leaders to flow crude. The visit was criticized by human rights activists and other critics.

“We’re looking at what other options we might have,” Biden told reporters Thursday at the White House. “We haven’t made up our minds yet.”

There is a bipartisan counter-policy towards Saudi Arabia. In 2020, the reasoning was reversed, as then-President Donald Trump was pressuring Saudi Arabia to cut production to boost prices for US producers after oil prices fell amid demand for during the early days of the coronavirus pandemic. Republican Senator Bill Cassidy, who represents the oil-producing state of Louisiana, introduced legislation to pull US troops from Saudi Arabia and impose a tariff on imported oil. A year earlier, Congress passed with bipartisan votes a bill to block arms sales to Saudi Arabia because of the murder of Khashoggi in 2018. Trump vetoed it.

However, neither Saudi Arabia nor OPEC+ will be on the November ballot.

The drop in oil output “shifts the conversation from what Democrats want to talk about — the weaknesses of the GOP and abortion — to things Republicans want to talk about,” said University of Virginia political analyst Kyle Kondik. “I don’t think the Democrats have an effective response to inflation.”

Republicans seized on the announcement to blame Biden for leaving the US too vulnerable to foreign oil suppliers.

Republican Representative Kevin Brady said the production cuts “couldn’t have come at a worse time,” but said the real issue is that Democrats have pursued a climate agenda that he said has discouraged domestic production.

“The obvious solution is to reverse the policy and maximize American energy production,” the Texas Republican said on Bloomberg Television’s “Balance of Power with David Westin.” He said Biden gambled on meeting the crown prince during a visit to the kingdom in July. “They put a makeover on him,” Brady said.

(Updates with Durbin, Grassley urging legislation in the 10th section)

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