Biden Advisor Says Gulf States Could Ramp Up Oil Production—And Gas Prices May Fall Toward $4 Per Gallon

Topline

Persian Gulf oil producers will likely take steps to boost production in the weeks following President Joe Biden’s trip to meet with Middle Eastern leaders, one of the president’s energy advisors indicated Sunday, predicting U.S. gas prices could continue their recent slide from record highs and approach $4 per gallon.

Key Facts

Senior State Department energy security advisor Amos Hochstein is “confident” that there will be “a few more steps” in the coming weeks for increased oil production in the region, based on conversations during Biden’s weekend trip to Saudi Arabia, he said during a Sunday morning appearance on CBS’ Face the Nation.

Last week, Biden said he believed Saudi Arabia would supply more oil after visiting the kingdom—although he did not receive confirmation—and Hochstein said Sunday “there is room for increased production” in some other Gulf countries.

Hochstein did not specify which nations could boost oil exports, but he mentioned the president and his advisors met with members of the Gulf Cooperation Council, which includes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.

What To Watch For

National Security Advisor Jake Sullivan said Friday he expects more clarity about whether Saudi Arabia will increase production after the August 3 meeting of OPEC+, which includes the Organization of the Petroleum Exporting Countries and several other nations. Over the last year, members of OPEC+ have gradually increased oil export targets each month.

Key Background

Increased oil supply would help bring down gas prices at U.S. pumps, which have finally begun to fall in recent weeks after skyrocketing to a record $5 a gallon on average early last month in the wake of Russia’s invasion of Ukraine. On Sunday, the average price for a gallon of regular gasoline in the U.S. was about $4.53, according to AAA, and Hochstein said he expects the price to drop further to around $4 a gallon. Oil prices also fell last week, but some analysts expect the price of both to rebound later this year. According to the Washington Post, gas prices could surge again ahead of another round of sanctions against Russia, including European bans on importing Russian oil by sea and insuring Russian oil tankers.

Tangent

Biden’s first presidential trip to Saudi Arabia was controversial, especially his meeting with Saudi Crown Prince Mohammad bin Salman, the de facto leader of the country, who has been accused of human rights abuses. Bin Salman ordered the killing of Washington Post journalist Jamal Khashoggi, a frequent critic of the Saudi regime, according to U.S. intelligence services. Biden and the crown prince greeted each other with a fist bump over the weekend, which Washington Post publisher Fred Ryan called “shameful” and will help bin Salman receive “the unwarranted redemption he has been desperately seeking.”

Further Reading

Oil Selloff Continues Amid Recession ‘Panic,’ But Analysts Predict Prices Will Rebound Later In 2022 (Forbes)