On Thursday’s broadcast of Bloomberg’s “Bloomberg Markets: The Open,” White House National Economic Council Director Brian Deese responded to questions on whether the Biden administration asked OPEC+ to delay its production cut for a month by stating that he didn’t want to get into “private conversations” and “communications that we’ve had with OPEC members and continuing have been based on our assessment of the economic circumstances of supply and demand in global oil markets.”
Host Jonathan Ferro asked, [relevant exchange begins around 39:15] “On OPEC+, the NSC Spokesperson John Kirby called the decision shortsighted, a shortsighted decision that benefited Russia. Can you understand why using the SPR as the strategic midterm reserve is a shortsighted decision that only leaves this country even more exposed to the whims of OPEC+ next year?”
Deese answered, “I disagree. We said that the OPEC decision was shortsighted precisely because the lack of supply and reliable supply continues to be the dominant challenge globally in energy markets. The lack of supply continues to be the dominant risk. And the use of the Strategic Petroleum Reserve, in a historic, but calibrated way, starting last winter, was designed to address that problem and to help have additional supply on the market during this transition and during a period where we knew Russian supply was coming off and U.S. producers were ramping up. That’s why, if you talk to most energy market analysts, they will point to the fact that that use of the Strategic Petroleum Reserve as a bridge as U.S. producers brought production back online was one of the principal reasons that kept oil prices from moving up even more quickly over the course of the summer and into the fall. That’s a prudent use of the asset, as a transition as U.S. producers ramp up.”
Ferro then asked, “You say it’s a prudent use of the asset. Other people are very worried about this. You’ve drained the SPR to its lowest level in four decades. There’s some accusation that you’re using — you’re putting the polls before America’s energy security. Brian, the Saudis themselves said this morning that the U.S. requested a one-month delay to the OPEC+ output [cut]. I wonder why would that be. Brian, can you tell me whether you did ask the Saudis for a one-month delay to that decision? Are they telling the truth?”
Deese responded, “Look, we clearly communicated our views to OPEC members that we thought it was shortsighted for them to take the action that they were contemplating and they announced. With respect to the Strategic Petroleum Reserve, this was a calibrated decision to address the real issues in the market. We talked to U.S. industry last winter. We identified that there was about a million-barrel-a-day gap between what they were producing this winter and what they said that they could get production to by late this fall. And that million-barrel gap was what we calibrated to make the decision on the use of the Strategic Petroleum Reserve and people should feel confident that the Strategic Petroleum Reserve continues to be an asset that we can deploy to address our economic and national security needs. That’s always what has dictated the president’s decisionmaking on this and that’s what will dictate his decisionmaking on this going forward.”
Ferro followed up, “Brian, you didn’t answer the question. So, I’m going to ask it again. I’m going to share with you and share with our audience the quote from the Saudis this morning, ‘The government of the Kingdom of Saudi Arabia would [also] like to clarify that based on its belief in the importance of dialogue and exchange of views with its allies and partners outside [the OPEC+ group] regarding the situation in the oil markets, the government of the Kingdom clarified through its continuous consultation with the U.S. administration that all economic analyses indicate that postponing the OPEC+ decision for a month, according to what has been suggested, would have had negative economic consequences.’ Brian, again, it’s a really straight question. Did you ask the Saudis to delay that decision for a month, are they telling the truth or not?”
Deese answered, “Look, I’m not going to get on [the] air and disclose private conversations that members of our administration had with counterparts.”
Ferro then cut in to ask, “But it’s not private. The Saudis have shared it with us. You’ve got the opportunity to say it’s true or not. Is it true or not?”
Deese responded, “What I will say and what I will say clearly is that the communications that we’ve had with OPEC members and continuing have been based on our assessment of the economic circumstances of supply and demand in global oil markets. We disagree with the assessment in that statement that it was economically the right or necessary or appropriate thing to do to reduce production at a time where the lack of global supply on the market continues to be the predominant challenge in global energy markets. That has been and continues to be the motivation behind all of our engagements internationally.”
Ferro then stated, “Again, they’re suggesting it’s a political one, that your strategy is political, that your efforts –.”
Deese cut in to counter, “I understand what they’re suggesting, and what I’m saying to you is that our strategy has always been grounded in an assessment of the economics of the situation and what is prudent for the global economy, for the U.S. economy, and U.S. families.”
Follow Ian Hanchett on Twitter @IanHanchett
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