Biden's new Saudi strategy
President Biden has tried to convince the Saudis to pump more oil with honey. Now he's trying vinegar.
Why it matters: With a new warning that the White House might support legislation targeting OPEC+ in Congress, Biden crossed a symbolic threshold — and sent a clear signal to the Saudis that he’s prepared to escalate.
- For some Democrats, he needs to go further: "President Biden ... should call the King himself," Rep. Ro Khanna (D-Calif.) told Axios. "He should say you have five days to reverse your decision. If not, I am going to work with Congress to pass a ban on supplying air parts to your Air Force.
- "The American people have had enough. We will not be bullied by a third-rate power that is committing human rights atrocities."
Between the lines: Biden is now at odds with the two entities — Big Oil companies and Big Oil countries — that have the power to solve his most pressing domestic political problem: rising prices at the pump.
- Biden has consistently blamed oil and gas companies for high prices and used a visit to FEMA headquarters last week to revive his warning: "Do not — do not — do not use this storm [Hurricane Ian] as an excuse to raise gasoline prices or gouge the American public," he said.
Driving the news: Administration officials were scrambling over the weekend with a last-minute lobbying effort to dissuade OPEC+ from lowering its production targets, reportedly describing the prospect as a "total disaster."
- That effort failed and OPEC+ on Wednesday announced its 2 million barrels a day cut, scheduled for next month.
- The White House fired back with a double-barreled shot from Jake Sullivan, the national security adviser, and Brian Deese, the director of the National Economic Council.
- Their joint statement was designed to suggest the White House would reverse course and support bipartisan legislation — so-called NOPEC — that would make the oil-producing cartel legally liable for any price collusion.
Behind the scenes: While some Democrats privately suspect Saudi Crown Prince Mohammed bin Salman of engineering the cut to hurt their party in November, White House officials don’t go as far.
- Two of Biden's most senior advisers were in Saudi Arabia just 10 days ago, in part to deal with potential oil cuts and energy security.
- Many officials thought the trip had managed to open a new page with the Saudis, Axios' Barak Ravid notes.
What they're saying: Khalid Aljabri, a Saudi dissident, made a direct link between OPEC's move and the midterms. "This unprecedented cut is nothing short of a naked assault on democracy and election interference to harm Biden and the Democrats," he alleged.
- "I think it’s time for a wholesale re-evaluation of the U.S. alliance with Saudi Arabia," Sen. Chris Murphy (D-Conn.), a top critic of the Saudis, told CNBC on Tuesday.
The intrigue: The White House has other cards to play. But all of them are controversial.
- A potential nuclear deal with Iran could bring more than a million barrels of oil a day onto international markets.
- The White House hinted Wednesday they reserve the right to release more oil from the Strategic Petroleum Reserve — beyond the 10 million barrels in the November release it has already announced. Republicans will howl, but the president's authority is clear.
- The Biden administration can also turn to Venezuela. The Wall Street Journal scooped Wednesday evening that Biden is preparing to scale down sanctions on the Maduro regime to allow Chevron to resume its activities.
The other side: Republicans are already using OPEC's cut to criticize Biden.
- "Joe Biden caused this crisis with his destructive energy policies and foreign policies. I'm deeply disappointed by the Saudi decision and wish they would act more like an ally during current conditions, but this is Joe Biden's fault," Sen. Ted Cruz (R-Texas) told Axios.
Go deeper: What OPEC's 2 million-barrel cut could mean for U.S. gas prices