Buried lede: The real reason the Saudis are refusing Joe Biden's beggings to ramp up oil production
Joe Biden has driven up energy prices by halting leases for drilling on federal lands, shutting down the critical Keystone XL pipeline, and demonizing Big Oil with investigations into skyrocketing energy prices, which are globally set.
What he hasn't been doing is anything constructive to lower energy prices. He's thrown out shiny baubles such as the release of two days' oil reserves onto the global markets as his claimed 'tool' for driving down energy prices, hoping you don't notice his other acts. He's pathetically begged the Saudis and OPEC sheiks to raise production in lieu of the local pipelines and production he has shut down.
But now there's another way he's driving energy prices sky-high and I found it in a buried lede that ran in a long story on CNN:
The move [to release reserves from the Strategic Petroleum Reserves] may instead largely act as a signal to OPEC nations and Russia that the US is serious about taking action to lower prices after those nations were reluctant to ramp up oil production to reduce prices.
Biden officials have warned the Saudis for weeks that the US would find alternative solutions if the price of crude oil topped $85 a barrel, officials said, which it did late last month. But Saudi Arabia has stood firm in refusing to increase output and has priced in -- wrongly, in the view of US officials -- the possibility that the US reaches a nuclear deal with Iran, two US officials said. The Saudis' concern is that sanctions on Iran would then be rolled back, allowing the country to ramp up its oil production and compete with OPEC+.
Turns out that Joe's hankering for a nuclear deal with Iran is driving the Saudis to hold back on production.
The way it goes is this: The Saudis, who are known as the 'anchor producer' in the oil world, have cut back on production in order to raise or keep the price of oil higher. They need high prices because they know that prices are going to go down. How would they go down? If Joe Biden rams through his Iran deal with the mullahs and lifts sanctions on Iran. Iran's got a lot of oil it can sell in the world markets and all that new oil means the global price of oil goes down. More oil, cheaper prices.
The Saudis are actually banking on that happening, despite the fact that Iran's mullahs, as this analysis by Hamid Enayat the other day explains, are slow-walking the deal because they really, really like having a nuclear bomb which they see as key to maintaining their grip on power in Iran. Given a choice between killing off their mortal enemy -- the Saudis -- by signing a deal with eager-for-a-deal Joe Biden, or maintaining their grip internally, the mullahs have chosen the latter, which tells you a lot about what's going on in Iran.
But the Saudis think it will happen at some point, maybe soon, maybe later, they aren't taking chances. Every big oil producer knows that prices go up and prices go down. When they go down, it's bad for them, but only if they haven't saved for a rainy day, which is what all of the smart ones do. Dumb ones, like Venezuela, assume that oil prices will always be high and the money will roll in and out, so they don't save for a rainy day, they spend like sailors, saving nothing. But 'dumb' in the oil world is relatively rare, and nobody ever called the Saudis 'dumb.'
In short, it's Joe Biden's eagerness for a nuclear deal with Iran that is driving the Saudis to keep production low, energy scarce, and prices high. Biden of course, won't drop that course of action. But so long as he continues on that idiot path, and shuts down American production to boot, what can he expect? High oil prices worldwide are all his doing.
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