A top Saudi diplomat present at the meeting between Joe Biden and Saudi Crown Prince Mohammed bin Salman denied Biden pressured them to increase oil production, and argued that high gas prices in the U.S. are a “function of the lack of refining capacity” rather than a shortage of oil.
In an interview on CNN’s “Situation Room” on Friday, Saudi Minister of State for Foreign Affairs Adel al-Jubeir refused to commit to producing more oil while explaining that that high domestic gas prices are a result of Biden’s policies.
“Did President Biden ask you, Saudi Arabia, to increase oil production with the hope that it would reduce the price of gasoline in the United States?” anchor Wolf Blitzer asked.
“Not in — with specificity because the president knows that [the] energy issue is an issue of supply and demand. It’s an issue of balancing markets. Saudi Arabia’s committed to ensuring stability in the oil markets. The U.S. government is aware of this,” al-Jubeir responded.
“The issue of increases in prices of gasoline that we’ve seen recently are really a function of geopolitics and psychology more than they are about fundamental supply/demand,” he continued. “The problem of gasoline in the United States is more a function of the lack of refining capacity in the United States than a shortage of actual crude oil.”
Blitzer asked: “But is Saudi Arabia ready to increase oil production?”
Saudi Arabia has made it very clear over the past decades that it seeks to [ensure] market stability, that it looks at the fundamentals of supply and demand, and that it works within OPEC and now within OPEC-plus to ensure that the markets are adequately supplied with crude oil. Saudi Arabia has increased its oil production over the past year substantially in accordance with the demands of the market, and this is a situation that is continuously being assessed by our Energy Ministry and by experts in this area to determine whether or not more oil is required or less oil is required.
Blitzer again asked if Biden “pressed” the Saudis on the issue of boosting oil production.
“No, the president doesn’t press us on this issue. The president is aware that Saudi Arabia is keen on maintaining stability in the markets,” al-Jubeir said. “Wolf, the President did not come here to press Saudi Arabia. The President came here to have a meeting with one of America’s most important allies in the world and in the region. We face common challenges that we need to work together in order to overcome.”
Data from the U.S. Refinery Capacity Report appears to support al-Jubeir’s claim about refining being a key factor in rising gas prices in the U.S.
Crude oil distillation capacity in the U.S. fell from 19 million barrels per calendar day at the start of 2020 to 18.1 million at the start of 2021, marking the first decrease in refinery capacity since 2017, the report noted.
Phil Flynn, a senior account executive/market analyst at the Price Futures Group, also pointed out that “refineries are getting squeezed out of business because of stricter regulations from the Biden administration and the pressure by the government” to reduce gasoline demand.
Five refining facilities have already shuttered in 2021, including the Shell refinery in Convent, Louisiana, as well as New Mexico, California, North Dakota, and Wyoming.
Crown Prince Mohammed bin Salman announced Saturday that Saudi Arabia would increase oil production from 10 million barrels a day to 13 million barrels.
#عاجل| ولي العهد السعودي: قررنا زيادة إنتاجنا من النفط إلى 13 مليون برميل يومياً
— 24Live (@20fourLive) July 16, 2022
It remains to be seen if such a boost in oil production will help lower U.S. gas prices, but if U.S. refining continues to decline, it may likely have no effect.