Photo by Maria Lupan / Unsplash

Here are some key points from different perspectives:

President Joe R. Biden has said that he was disappointed with the OPEC+ decision and would explore other alternatives. His administration has even said they would try to figure out ways to boost domestic production.

So far, he has done nothing domestically simply because his administration is committed to ending the use of fossil fuels and move to "green" energy. So boosting domestic production would renege on that promise and cause domestic political backlash. Actually that backlash is already here.

So his administration is basically begging other producers to produce more and also run down the Strategic Oil Reserves.

So far, Biden has cut the reserves in half and dropped them to their lowest level since the 1980s. This record drop in reserves can only continue for several more months so a more permanent solution must be found.

At the same time, Mohammed Bin Salem (MBS) and other Gulf countries are feeling that the US is not a solid ally and could flake on the Arab world at a moment's notice. They see that Biden has stopped the pressure on Iran, which is the leader of the Shiite Muslim community in their war with the leader of the Sunni Muslim community, Saudi Arabia. The Biden administration doesn't seem to grasp the importance of this in the Gulf states.

The war in Yemen is a proxy war on the border of Saugi Arabia with the rebels being funded and armed by Iran to end the Saud family regime in Saudi Arabia. Saudi Arabia views the conflict as an existential threat. They have relied on American intelligence through air surveillance to guide the Saudis in their fight with the Yemeni rebels.

The rebels have fired missiles and launched drone attacks into Saudi Arabia and even into the United Arab Emirates, where I am currently located. They have killed a few Saudis and Emiratis but the main damage was to a huge oil refinery in Saudi Arabia.

The US has withdrawn that support. The US just sent $47 to Ukraine at the same time they are ignoring an existential threat to the Saudi regine. The Saudis are not happy.

Another existential threat to the Saudi regime is the West's move away from fossil fuel. Obviously, a world with no demand for fossil fuels would mean the end of the current wealth and clout of the Guld countries. But they look at Biden who is telling them and the world that the US will basically transition by 2030 and, oh, by the way, Saudi Arabia is a pariah state and should be treated like one.

So the Saudis look at truly existential threats and see the US leading the charge against the Saudis.

So the Saudis are only tenuously allies of the US. They see:

  1. Lack of support against Iran
  2. Insulting MBS
  3. Insulting Saudi Arabia
  4. Trying to end fossil fuels

And they say to hell with the US. We will think only of ourselves.

This has left the Biden administration gasping for air or, at least, oil

Biden was humiliated by the Saudi cut in the last week. Green Joe went to Saudi Arabia to beg for more fossil fuel production (huh?) and got slapped in the face this week.

You may expect:

  1. The Saudis and other Gulf states to go a more independent path
  2. The Biden administration will boost oil production in the US but they will do it through force using their ability to declare a crisis and force oil companies to produce more. They don't want the free market to boost oil; they want to take control of the oil market in the US.
  3. Oil prices will go moderately higher in the short run, causing gasoline to approach $5 per gallon again.