OPEC and allied oil-producing countries rebuffed pressure from U.S. President Joe Biden to pump significantly more oil and lower gasoline prices for American drivers, deciding Thursday to stick with their plan for cautious monthly increases even as prices surge and the global economy is thirsty for fuel.
The OPEC+ alliance, made up of OPEC members led by Saudi Arabia and non-members led by Russia, approved an increase in production of 400,000 barrels per day for the month of December at an online meeting.
That is in line with the group's road map to add that amount of oil to the market every month into next year. The plan is to open the petroleum taps bit by bit — even as oil prices have surged to seven-year highs — until deep production cuts made during the coronavirus pandemic are restored.
That hasn't gone down well with Biden, who has made repeated calls to pump more oil. The U.S. used the Group of 20 summit last weekend in Rome to consult with other oil-consuming countries on how to exert influence over the producing countries and what they might do if the Saudis and Russians continue to hold back.
"Our view is that the global recovery should not be imperiled by a mismatch between supply and demand," a White House National Security Council statement said Thursday. "OPEC+ seems unwilling to use the capacity and power it has now at this critical moment of global recovery for countries around the world."
Saudi Energy Minister Prince Abdulaziz bin Salman said member countries were "underscoring their commitment to market stability."
He said OPEC+ was serving as a responsible market "regulator," comparing the relative stability of the oil market to the wild swings in prices for natural gas, which have risen more than five times what they were at the start of the year amid a global fossil fuel crunch.
"Markets need to be regulated, or things may go astray as we have been seeing over the past four months," he said at a news conference.
The caution from OPEC+ means higher prices worldwide and more revenue for producing countries. Slower increases also mean less risk of increasing production too fast and sending prices suddenly lower as the group braces for the possibility of more economic turbulence from COVID-19 outbreaks this winter or from supply chain backups, labor shortages and rising consumer prices that have threatened the global recovery.
Russian Deputy Prime Minister Alexander Novak said the alliance considered "the pluses and minuses," including higher reserves in some countries, the seasonal drop in demand in winter and the impact of the delta variant.
Suhail Almazrouei, energy minister of the United Arab Emirates, said oil markets were expected to be in surplus by early next year and that the gradual road map "is taking us smoothly to that position" where supply and demand would "rebalance in the first and second quarters."
U.S. oil prices eased somewhat this week after hitting their highest level since 2014. Oil traded up 0.6%, at $81.39 per barrel, on the New York Mercantile Exchange after the OPEC+ decision, down from its recent peak of over $85 last week. International benchmark Brent crude traded at $82.74 Thursday, down from over $86 last week.
Oil prices fell ahead of the meeting on speculation that the U.S., possibly in coordination with other countries, could try to quell the recent price rally by releasing crude from strategic reserves.
Biden this week blamed higher oil prices on refusal by Russia and the OPEC nations to increase production. He declined to say what steps his administration would take but hinted that additional actions were coming.
"We'll see what happens on that score, sooner than later," Biden said.
The White House statement reiterated that Thursday without giving specifics, saying "we've been in conversations with energy consumer countries and we will consider the full range of tools at our disposal to bolster resilience and public confidence."
Biden is seeking more oil to lower gas prices for U.S. drivers while also pledging at the U.N. climate summit in Scotland this week to reduce emissions from such fossil fuels to curb climate change. He even called out Russia and Saudi Arabia during his time in Europe for not doing more to address climate change.
The president acknowledged the irony at the end of the Group of 20 summit in Rome, saying that "on the surface" it does "seem inconsistent." But Americans need to be able to commute to work and moving to renewables will take time, Biden said.
He said it was "just not rational" to "move to renewable energy overnight."
The steady rise in U.S. gas prices has eased in recent days as the typical post-summer drop in demand was delayed this year, according to motor club federation AAA.
The average U.S. price of gas rose to $3.40 a gallon, but the 2-cent rise over the past week is the smallest weekly increase in a month. AAA predicted that elevated crude prices will likely keep pushing up gas prices as long as oil prices are above $80 per barrel.