OPEC and its allies may have a significant impact on the upcoming U.S. presidential election in November. Observers are paying close attention to whether Saudi Arabia and Russia, the world’s largest oil exporting nations, will increase prices by reducing production.
Maintaining voluntary cuts of 2.2 million barrels per day on top of the cartel’s total combined production cuts of 5.86 million bpd could lead to higher gas prices in the U.S. These prices are closely linked to presidential approval ratings and have been a challenge for President Joe Biden during his first term.
Unlike earlier in his presidency, Biden now has fewer resources available to help lower gas prices, including a diminished U.S. emergency oil stockpile. OPEC+ has become more assertive and less willing to accommodate U.S. requests in favor of their own interests.
Experts point out that OPEC+ will act in their best interests regardless of who is in the White House, highlighting the complex relationship between gas prices, presidential approval ratings, and OPEC’s decisions.
Gas prices have been a significant issue during Biden’s term, with fluctuations affecting his approval ratings. The administration has taken steps to address high gas prices, including selling emergency oil reserves.
Oil markets are currently tight due to extended OPEC+ supply cuts, increased demand, and conflicts in the Middle East. Analysts predict that oil prices will rise in the second half of the year, putting pressure on gas prices.
Despite lower gas prices at the moment, it is uncertain how prices will evolve throughout the year. Biden’s focus on gas prices contrasts with OPEC’s primary goal of balancing their budgets.
OPEC+ decisions are influenced by political factors, as seen in 2022 when Saudi Arabia defied a request from Biden to cut production. This reflects a more assertive Saudi Arabia that prioritizes its own interests.
In the short term, it is unlikely that Biden will ask OPEC+ for more oil production, as there is no clear demand for additional oil. OPEC+ will continue to prioritize their own interests over political considerations.
