U.S. calls on OPEC and its allies to pump more oil – Reuters

Aug 11 (Reuters) – U.S. President Joe Biden’s top aides are pressuring OPEC and its allies to boost oil output to tackle rising gasoline prices that they see as a threat to global economic recovery.

Biden’s national security adviser Jake Sullivan criticized the world’s major oil producers, including Saudi Arabia, for what he said were insufficient crude production levels in the aftermath of the global COVID-19 pandemic.

“At a critical moment in the global recovery, this is simply not enough,” he said in a statement.

The unusual statement ratcheted up international pressure and comes as the administration tries to contain a range of rising prices and supply bottlenecks across the economy that have fueled inflation concerns.

Biden has made recovering from the economic recession triggered by the pandemic a key priority for his administration.

The message also underscored the new dynamic between Washington and OPEC since Biden’s predecessor, Donald Trump, broke with prior practice in demanding specific policy changes to lower prices. Trump had threatened to withdraw military support from OPEC’s leader Saudi Arabia over output.

Biden’s administration is pressing countries within OPEC+, which groups the Organization of the Petroleum Exporting Countries with Russia and other big producers, “on the importance of competitive markets in setting prices,” Sullivan said. “Higher gasoline costs, if left unchecked, risk harming the ongoing global recovery,” he added. “OPEC+ must do more to support the recovery.”

U.S. retail gasoline prices are running at about $3.18 a gallon at the pumps, up more than a dollar from last year at this time, according to the American Automobile Association.

International benchmark Brent crude was trading at around $70 a barrel on Wednesday, down half a percent, after the U.S. issued its statement. That is lower than the prices above $77 in early July, but still represents an increase of nearly a third from the beginning of the year.

The Biden administration’s push for lower fuel prices grates with its efforts to secure global leadership in the fight against climate change by encouraging a broad transition away from fossil fuels toward cleaner energy sources and electric vehicles.

A Republican lawmaker criticized Biden, a Democrat, for discouraging domestic fossil fuel production.

“It’s pretty simple: if the President is suddenly worried about rising gas prices, he needs to stop killing our own energy production here on American soil,” said Republican Senator John Cornyn of Texas, in a statement. “Begging the Saudis to increase production while the White House ties one hand behind the backs of American energy companies is pathetic and embarrassing.”

U.S. oil production has dropped from a record high of 12.3 million barrels per day (bpd) in 2019, and been stagnant at about 11 million bpd since the pandemic.

OPEC+ has been gradually easing a record output cut of 10 million bpd, about 10% of world demand, made in 2020 as oil use and prices recover from the pandemic-induced slump. As of July, the cut had been eased to about 5.8 million bpd.

At a meeting held in July, OPEC+ agreed to boost output by 400,000 bpd a month starting in August until the rest of the 5.8 million bpd cut is phased out. OPEC+ is scheduled to hold another meeting on Sept. 1 to review the situation.

The White House on Wednesday also directed the Federal Trade Commission (FTC), which polices anti-competitive behavior in domestic U.S. markets, to investigate whether illegal practices were contributing to higher U.S. gasoline prices.

“During this summer driving season, there have been divergences between oil prices and the cost of gasoline at the pump,” Biden’s top economic aide, Brian Deese, wrote in a letter to FTC chair Lina Khan.

He encouraged the FTC to “consider using all of its available tools to monitor the U.S. gasoline market and address any illegal conduct.”

Reporting by Trevor Hunnicutt; Additional reporting by Susan Heavey and Aakriti Bhalla; Editing by David Evans, Alexander Smith and Marguerita Choy

Our Standards: The Thomson Reuters Trust Principles.