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The White House’s top energy adviser said he was confident Arab oil producers would not use energy as a weapon, despite growing anger across the Middle East over Israel’s blockade and bombing of Gaza.
Amos Hochstein told the Financial Times that the level of cooperation between US and Gulf producers, including Saudi Arabia, has been “very strong” over the past two years.
“Oil has been used as a weapon from time to time since it became a traded commodity, so we’re always concerned about that, and we’re working against that, but I think it hasn’t happened yet,” he said in an interview. “We have two active wars in the world, one of them involving the third largest producer in the world [Russia]The other is in the Middle East, where missiles fly close to oil production sites, yet prices are near their lowest levels of the year.
Hochstein said it showed that “we are managing it fairly well, but we can never rest, and the situation is evolving.”
He added: “Cooperation and coordination between producers and consumers over the past two years has been very strong in trying to prevent energy shocks.”
Leading Gulf OPEC+ members have rejected Iran’s calls for an embargo in protest of Israel’s military tactics in Gaza as it pursues Hamas.
But people familiar with the thinking of Saudi Arabia, the world’s largest oil exporter, say a drop in oil prices to a four-month low of $77 a barrel last week and rising anger among members over Gaza could contribute to a decision to make further cuts. to oil supplies.
Riyadh is expected to extend voluntary oil production cuts until next year when OPEC+ members meet in Vienna on November 26, and production cuts of up to 1 million barrels per day, about 1 percent of global supplies, could be on the table.
Saudi Energy Minister Prince Abdulaziz bin Salman, half-brother of Crown Prince Mohammed bin Salman, has led OPEC+ in cutting production since October 2022 despite White House opposition.
People close to Saudi Arabia’s thinking stressed that no final decision has been made yet, and stressed that any public statements by the country’s energy minister would likely try to keep the focus on the oil market, rather than the war between Israel and Hamas.
Riyadh routinely insists that its decisions are based on market conditions, not political considerations.
Prince Abdulaziz recently attacked hedge funds that increased their bets against oil, amid expectations that the market may move towards achieving a small surplus next year due to the weakness of the global economy and rising supplies outside OPEC.
Saudi Arabia joined other Arab countries in condemning Israel’s war against Hamas in Gaza, where more than 13,000 people have been killed, according to Palestinian officials, and called for an immediate ceasefire.
This has put the US’s Arab allies at odds with the Biden administration, which has strongly supported Israel’s military offensive after a devastating Hamas attack on October 7 that killed about 1,200 people, according to Israeli officials. The Palestinian Islamic Group also took about 240 hostages.
Hochstein declined to comment on the possibility of OPEC+ extending production cuts, or the Biden administration’s talks with Saudi Arabia and other producers.
But he said that over the past two years Washington had been “in constant and regular contact on a whole range of issues,” adding that “things are very strong.”
“I think we have come to an understanding with producers in the United States and producers in the Middle East and around the world that there is a limit to when prices reach a certain point, which negatively impacts global economic growth and ultimately impacts them,” Hochstein said. “They know our position very well, and I think I understand their position. We will not always agree, but the important point is that we can work together.”
Relations between Washington and Riyadh became tense after President Joe Biden took office and pledged to reevaluate American relations with the Kingdom and not deal with Prince Mohammed.
But it improved when Saudi Arabia and Washington negotiated an agreement that would have led to the kingdom normalizing its relations with Israel in exchange for a US security agreement and cooperation in its nuclear energy ambitions.
The war between Israel and Hamas has upended that process, but Saudi and American officials have hinted that they may eventually seek to build on those negotiations in the long term.
Additional reporting by David Sheppard in London
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