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The White House’s top energy adviser has said he is confident Arab oil producers will not weaponize energy, despite growing anger across the Middle East over Israel’s siege and bombing of Gaza.
Amos Hochstein told the Financial Times that the level of collaboration between the United States and Gulf producers, including Saudi Arabia, had 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 are always concerned about that, working against that, but I think so far it hasn’t,” he said in a statement. interview. “We have two active wars in the world, one involving the third largest producer in the world [Russia]the other in the Middle East, where missiles fly near where oil is produced and yet prices are near the lowest point of the year.”
This shows that “we are managing it pretty well, but we can never rest and it is an evolving situation,” Hochstein said.
“The collaboration and coordination between producers and consumers in recent years has been very strong to try to prevent energy crises,” he added.
Major Gulf states members of the OPEC+ cartel 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 top oil exporter, say a drop in oil prices to a four-month low of $77 a barrel last week and growing 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 a production cut of up to 1 million barrels per day could be on the table. , about 1 percent of global supplies.
Saudi Arabia’s energy minister Prince Abdulaziz bin Salman, half brother of Crown Prince Mohammed bin Salman, the nation’s daily leader, has led the OPEC+ group in cutting production since October 2022 despite rejection from the White House.
People close to Saudi Arabia’s thinking have stressed that a final decision has not yet been made and stressed that any public statement from the country’s energy minister will likely attempt 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 criticized hedge funds that have increased their bets against oil, amid expectations that the market could post a small surplus next year due to the weak global economy and rising supplies outside the OPEC.
Saudi Arabia has joined other Arab states in condemning Israel’s war against Hamas in Gaza, where more than 13,000 people have been killed, according to Palestinian officials, and calling for an immediate ceasefire.
This has put America’s Arab allies at odds with the Biden administration, which has strongly backed Israel’s military offensive after the devastating Oct. 7 Hamas attack that killed about 1,200 people, according to Israeli officials. The Palestinian Islamist 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.
However, he said that over the past two years Washington had been “in constant and regular contact on a large number of issues”, adding that “things are very solid”.
“I think we have come to an understanding with US producers, Middle Eastern producers and around the world that there is a limit to when prices reach a certain point, they negatively affect economic growth and ultimately affect them,” Hochstein said. saying. “They know our position quite well and I think I understand theirs. “We won’t always agree, but the point is we can work together.”
Relations between Washington and Riyadh were strained after President Joe Biden took office promising to reassess US relations with the kingdom and not engage in dialogue with Prince Mohammed.
But they improved when Saudi Arabia and Washington negotiated a deal that would have seen the kingdom normalize relations with Israel in exchange for a U.S. security pact and cooperation on its nuclear energy ambitions.
The war between Israel and Hamas disrupted that process, but both Saudi and American officials have hinted that in the long term they might try to take advantage of those negotiations.
Additional reporting by David Sheppard in London