Politico: Biden's visit to KSA will not bring gas prices down

By Al Mayadeen English
Source: Agencies
12 Jul 2022 09:44

According to a US analyst, even if Saudi Arabia were to flood the market with more oil, there is no guarantee that gas prices will come down

Biden arrives at Riyadh airbase in Riyadh, October 27, 2011. (Reuters)

Later this week, Biden will be visiting Saudi Arabia on a quest for more oil production and cementing a normalization agreement with "Israel". Many are asking what this could mean for gas prices, which have been on a hike in the US.

Saudi Arabia has the second-largest oil reserves in the world, and Biden has been demanding a boost in output - more output, cheaper gas, right? Not so much.

An article written in Politico argues that it's more complicated than it seems.

Saudi Arabia does not have much oil to give and is in fact struggling to meet its own production targets. If Riyadh were to release more oil, it would require them to forge a consensus among OPEC+.

“There's no way of visiting Saudi Arabia without it being in some sort of relationship to oil,” said Paul Sankey, lead analyst at Sankey Research, a research firm. “But in this instance, it's not obvious that there's anything that can be done.”

According to Ben Cahill from the Center for Strategic and International Studies, even if Saudi Arabia were to flood the market with more oil, there is no guarantee that gas prices will come down. The volatility in oil prices over the past few weeks, according to him, does not have much to do with supply disruptions, but rather the uncertainty of the war in Ukraine.

“A lot of the price run-up is due to geopolitics and financial speculation,” Cahill said. “If you look at the physical market, the actual demand and trading of the physical barrels of crude, there's really no disruption anywhere.”

In this case, why would Biden visit with these givens?

Last month, he told reporters that he won't be asking Saudi leaders directly to increase oil production, downplaying that his trip is meant to bring down fuel prices.

Cahill said the president has only a few available options, and asking OPEC for assistance is one of them. Although the visit won't have an impact, dialogue between the US and KSA is "constructive and it should be welcomed,” he said.

However, the visit is more involved in regional security than oil production.

With Biden's deeming Saudi Arabia a "pariah" state, while also blaming the Saudi de facto ruler Crown Prince Mohammed bin Salman as the murderer of The Washington Post columnist Jamal Khashoggi, Biden swallowed his pride, and defended the trip as necessary for US security interests.

In light of the sanctions on Russia, the region is “essential to global trade and the supply chains we rely on," Biden said.

Netanyahu highly values MBS role in signing 'Abraham Accords'

Yesterday, Israeli media relayed the appreciation of the leader of the Israeli opposition, Benjamin Netanyahu, to Saudi Crown Prince Mohammad bin Salman, for his contribution to the completion of the four so-called "Abraham Accords".

Netanyahu said that in case he assumes leadership once again, then he intends to achieve full "peace agreements" with Saudi Arabia, as well as with other Arab states.

The former Israeli Prime Minister's statement comes ahead of an upcoming Biden visit to the Middle East, during which he will meet with Palestinian and Israeli occupation officials.

According to Israeli media, Biden plans to meet with Netanyahu during his upcoming visit to "Israel".

This is the first time in which an Israeli official openly highlights bin Salman's clear contribution to the signing of the normalization agreements with the Israeli occupation.