The White House has called on Opec to boost oil production in an effort to curb high petrol prices that Biden administration officials say “risk harming the ongoing global recovery”.
Jake Sullivan, the national security adviser, said in a statement on Wednesday that while Opec and its allies had “recently agreed to production increases”, the additional output would “not fully offset previous production cuts that Opec+ imposed during the pandemic until well into 2022”.
“At a critical moment in the global recovery, this is simply not enough,” added Sullivan, saying that the US was “engaging with relevant Opec+ members on the importance of competitive markets in setting prices”.
US petrol prices have risen alongside soaring motor fuel demand as the economy has reopened from coronavirus-related lockdowns. Petrol was selling for an average of $3.19 a gallon, up almost 50 per cent from the same time last year, according to the AAA, an automobile association.
The highest recorded national average price was more than $4.10 a gallon, in 2008.
International oil prices softened about 1 per cent after the announcement but rebounded and were steady in Asian trading on Thursday. Brent crude was trading at just under $71.50 a barrel and West Texas Intermediate, the US benchmark, at about $69.30.
The White House’s intervention marked an abrupt shift from Donald Trump’s policy during last year’s oil market crash, when the former president pressed Opec to raise prices in an attempt to help US shale companies weather one of the worst market downturns in decades.
But the latest pivot was a reversion to the mean for US administrations — including Trump’s — that have frequently called for the Opec cartel to pump more oil to lower prices.
George HW Bush, Bill Clinton and George W Bush all pressed the producer group for more supply during periods of rising petrol prices or US military interventions in the Middle East.
Trump, who accused Opec of “manipulating” oil prices and ripping off Americans, struck a deal with Saudi Arabia in 2018 to increase oil production just before he pulled the US out of the nuclear deal with Iran and imposed sanctions on its oil industry. He then leaned on Opec to make its deepest-ever cuts in 2020.
The Opec output reductions and vaccine breakthroughs at the end of last year helped oil prices rally to more than $70 a barrel, although analysts were increasingly concerned that a coronavirus resurgence could hamper global demand.
The Opec+ group, including the United Arab Emirates, Saudi Arabia, Russia, Iraq and Kuwait, last month agreed to raise production by about 2m barrels a day, or more than 2 per cent of global appetite, to the end of 2021 and restore all the supplies it cut last year by the end of 2022.
Opec declined to comment on Sullivan’s statement on Wednesday. Asked whether Riyadh had responded to the request, Jen Psaki, White House spokesperson, said: “This is not meant to be for immediate response, necessarily; it’s meant to be a long-term engagement.”
The White House also published a letter on Wednesday from Brian Deese, director of the National Economic Council, to Lina Khan, the chair of the Federal Trade Commission, calling on the FTC to crack down on any collusion in the US petrol market.
Deese urged the agency to “consider using all of its available tools to monitor the US gasoline market and address any illegal conduct that might be contributing to price increases for consumers at the pump”.
Joe Biden told reporters he was concerned that lower crude prices were not being passed on to consumers. “Recently we’ve seen the price that oil companies pay for a barrel of oil begin to fall, but the cost of gasoline at the pump for more American people hasn’t fallen,” he said. “That’s not what you’d expect in a competitive market.”
Inflation has become a potent political issue, with Republicans accusing Democrats of driving up prices for consumers, including at the pump, through reckless federal spending. Senate Democrats approved a $1tn infrastructure package and a $3.5tn budget resolution this week.
The latest Bureau of Labor Statistics data, published on Wednesday, showed the rapid pace of US consumer price increases remained at a 13-year high in July, with the CPI rising 5.4 per cent last month compared with a year ago.
The oil industry and its allies criticised Biden’s request as inconsistent with his actions to restrain domestic fossil fuel production, such as an attempted pause on federal oil and gas lease sales.
“Begging the Saudis to increase production while the White House ties one hand behind the backs of American energy companies is pathetic and embarrassing,” said John Cornyn, a Republican senator from Texas.
Additional reporting by Hudson Lockett in Hong Kong