President Biden’s trip to Saudi Arabia was deemed a failure by analysts after oil-producing states announced that they would boost output by just 100,000 barrels a day starting next month — well short of the amount needed to bring down sky-high prices of gasoline.
The Saudi-led Organization of Petroleum Exporting Countries and its allies announced the modest increase in supply following a policy meeting held via videoconference on Wednesday.
The Biden administration held out hopes that its diplomatic overtures to the Saudi de facto ruler — Crown Prince Mohammed bin Salman — would yield a bigger boost in supply.
Biden reversed his campaign pledge to treat bin Salman as a “pariah” due to widespread Western intelligence assessments that the Saudi royal masterminded the murder of US-based Saudi dissident journalist Jamal Khashoggi.
The president was photographed giving bin Salman a “fist bump” during their meeting in Jeddah last month.
Despite the diplomacy, the cartel opted to keep supplies tight while prices remain high. The 100,000 barrels a day is a far cry from the 648,000-barrels-a-day increase that was announced in June.
The OPEC+ meeting’s participants put out a statement on Wednesday acknowledging that “the severely limited availability of excess capacity necessitates utilizing it with great caution in response to severe supply disruptions.”
Analysts said the OPEC+ announcement amounted to a drop in the bucket.
“It’s a slap in the face for the Biden administration,” Matt Smith, a lead analyst at trade analytics firm Kpler, told CNN.
“This trip, meeting with MBS, just didn’t work.”
Americans have experienced some relief at the pump in recent weeks as gas prices have gradually retreated from record highs earlier this summer.
As of Wednesday, the average cost of a gallon of regular unleaded fuel stood at $4.16 nationwide — down from $4.81 a month ago.
In the last 10 days, the price of gas has fallen some 20 cents.
But analysts warn that the ongoing Russian invasion of Ukraine as well as a surge in demand could easily reverse that trend.
Robert Yawger, vice president of energy futures at Mizuho Securities, agreed with Smith.
“I must say I am surprised they only threw in 100,000 barrels per day,” Yawger said.
The White House on Wednesday acknowledged that the announcement will not have a noticeable impact on gas prices.
When asked if Americans can expect the OPEC+ move means gas prices will fall precipitously in the near future, Amos Hochstein, the White House’s top energy adviser for energy security, told CNN: “Well, no it doesn’t.”
Last month, Hochstein said that he was “pretty confident” that OPEC+ would significantly boost production “as a result of the president’s conversations.”
Hochstein said on Wednesday that the OPEC+ move was a “step in the right direction,” but he declined to answer when asked if Biden was disappointed.