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Abu Dhabi
CNN
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The Saudi-American relationship appears to have hit rock bottom.
After a move by the Saudi-led OPEC+ oil cartel to cut oil production, which could see inflation in the United States soaring just weeks ahead of the midterm elections, US President Joe Biden told CNN’s Jake Tapper that it’s time for the US to rethink its relationship with Saudi Arabia.
On Wednesday, Saudi hit back, saying a US request to postpone the decision to cut production “for a month” would have had a negative economic impact. The idea of the administration asking the Saudis to delay the cut until after the elections has Biden’s critics seething.
The White House responded Thursday by saying Riyadh was trying to “spin” the matter. The National Security Council’s strategic coordinator for communications, John Kirby, reiterated that the US is “reevaluating our relationship with Saudi Arabia in light of these actions.”
The White House and the Democratic party are on a mission to punish the kingdom. A host of measures have been suggested, all drastic moves that analysts say could seriously dent the US’ eight-decade partnership with the kingdom – if they ever materialize.
Riyadh has suggested that the threats are pre-election posturing on the Democrats’ part.
“When you are in the election season, what some call ‘the funny season’, a lot of things are said and a lot of things are done that may not make sense at another period of time,” Adel al-Jubeir, minister of state for foreign affairs, told CNN’s Becky Anderson. “I hope this is what we’re dealing with here.”
Here’s a look at the options US politicians are considering, and how viable they are:
Passing the NOPEC Bill
Almost immediately after the decision to cut oil production, the White House said President Biden would “consult with Congress on additional tools and authorities to reduce OPEC’s control over energy prices,” which was widely interpreted as a threat to back the bipartisan NOPEC bill that could spell the end of the OPEC cartel.
The bill is meant to break oil prices from the grip of a few countries by exposing OPEC states to antitrust laws. If passed, the bill would lift immunity from OPEC members and their oil companies and sue them for colluding to boost prices.
A US Senate committee passed the bill in May. But in order to become law, it would still need to go through the full Senate and House and be signed by the President.
A survey by Morning Consult and Politico found that just under half of US voters would support the NOPEC bill, including over half of Democrats and two in five Republicans.
But passing the bill would not be without consequences to the US itself, analysts say.
“I think this will be a chilling effect on a lot of the oil and gas industry,” said Karen Young, senior research scholar at the Columbia University Center on Global Energy Policy, “and will make all kinds of joint ventures and investments with national oil companies more complex.”
There are also concerns that removing a cap on production would sink oil prices so low that the US oil industry could go out of business. Saudi Arabia has the lowest oil extraction costs in the world, so it can continue to make a profit at very low oil prices. Extraction costs in the US are significantly higher.
The American Petroleum Institute, a trade association for the oil and natural gas industry, has come out strongly against the bill, saying it would be…
Read More: As the US-Saudi oil spat intensifies, what are Biden’s options?