White House calls on Opec to boost oil production to contain fuel prices

The White House has called on Opec to boost oil production in an effort to curb high gasoline prices that Biden administration officials say “risk harming the ongoing global recovery”.

Jake Sullivan, Joe Biden’s national security adviser, said in a statement on Wednesday that while Opec and its allies had “recently agreed to production increases”, the boost 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,” Sullivan said, adding 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 American economy has reopened following Covid-19 related lockdowns. Petrol is selling for an average of $3.19 a gallon across the country, up almost 50 per cent from the same time last year, according to the AAA, an automobile association.

The highest ever recorded national average price was more than $4.10 a gallon, in 2008.

International oil prices softened about 1 per cent on the news, with Brent trading just under $70 a barrel and West Texas Intermediate, the US benchmark, at about $67.50.

The Biden administration’s calls for more oil from Opec come 17 months after Donald Trump’s White House pressed the cartel into its deepest-ever production cuts in a bid to raise crude prices, which briefly plunged below zero last year.

The Opec cuts and vaccine breakthroughs at the end of last year helped oil prices rally to more than $70 a barrel, although analysts are increasingly concerned that a coronavirus resurgence could hamper a global oil demand recovery. 

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 demand, to the end of 2021, and restore all the supplies it cut last year by the end of 2022.

Opec declined to comment in response to Sullivan’s statement on Wednesday.

The White House also published a letter on Wednesday from Brian Deese, director of the National Economic Council, to Lina Khan, the new chair of the Federal Trade Commission, calling on the FTC to crack down on any collusion in the US gasoline 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”.

“While many factors can affect gas prices, the president wants to ensure that consumers are not paying more for gas because of anti-competitive or other illegal practice,” he wrote.

The White House interventions came hours after Senate Democrats pushed through a sweeping $3.5bn budget resolution along party lines, in a 50-49 vote, with no Republican support. Republicans have accused Democrats of reckless spending that they say is driving up prices for American consumers, including at the pump.

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.

On Tuesday, 19 Republican senators signed on to a separate $1tn infrastructure spending bill that was widely seen as a significant achievement for the Biden administration.