U.S. calls on OPEC and its allies to increase oil production

By Trevor Hunnicutt

President Joe Biden’s top aides are pressuring OPEC and its oil-producing allies to boost production in an effort to combat climbing gasoline prices that they see as a threat to the 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 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 the economic recovery from the recession triggered by the coronavirus pandemic a key priority for his administration.

The 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.”

International benchmark Brent crude was trading at just under $70 a barrel on Wednesday, down 1%.

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.

OPEC+ has been gradually easing a record output cut of 10 million barrels per day, 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 barrels per day 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.”