U.S. delivers angry rebuke of massive OPEC+ production cut

The White House angrily pushed back at OPEC+ after the oil producer group announced its largest supply cut since 2020, lashing out at what President Joe Biden’s administration described as a “shortsighted” decision that came despite U.S. pressure to pump more to help the global economy.

Energy analysts believe the deep production cuts could yet backfire for OPEC kingpin and U.S. ally Saudi Arabia, particularly as Biden hinted Congress would soon seek to rein in the Middle East-dominated group’s influence over energy prices.

OPEC and non-OPEC allies, a group often referred to as OPEC+, agreed on Wednesday to reduce oil production by 2 million barrels per day from November. The move is designed to spur a recovery in oil prices, which had fallen to roughly $80 a barrel from more than $120 in early June.

International benchmark Brent crude futures traded at $93.53 a barrel during Thursday morning deals in London, up around 0.2%. U.S. West Texas Intermediate futures, meanwhile, stood at $87.83, almost 0.1% higher.

The U.S. had repeatedly called on the energy alliance, which includes Russia, to pump more to lower fuel prices ahead of midterm elections next month.

In a statement, the White House said Biden was “disappointed by the shortsighted decision by OPEC+ to cut production quotas while the global economy is dealing with the continued negative impact of Putin’s invasion of Ukraine.”

It added that Biden had directed the Department of Energy to release another 10 million barrels from the Strategic Petroleum Reserve next month.

“In light of today’s action, the Biden Administration will also consult with Congress on additional tools and authorities to reduce OPEC’s control over energy prices,” the White House said.

Strategists led by Helima Croft at RBC Capital Markets said that while the U.S. signaled further Strategic Petroleum Reserve releases were in the offing, they were unlikely to see another blockbuster release in the near term.

“A more clear risk, in our view, is the introduction of US product export restrictions in a rising retail gasoline price environment,” analysts at RBC Capital Markets said.

“Congressional action on NOPEC legislation also looks like a credible outcome in light of the NSC statement about working with Congress to reduce OPEC’s overall influence on the oil market. White House opposition to NOPEC has served as a restraining influence on Congressional leaders,” they continued.

“Today’s dog whistle may be interpreted as a sign that the President will not necessarily stand in the way of a floor vote on the bill that would declare OPEC a…