Will Biden Benefit From His Trip to the Middle East?

Crude futures slumped as much as 5 percent on Thursday in hopes that President Joe Biden could encourage Saudi Arabia to produce more oil.

Biden will be meeting with Saudi leaders, including Mohammed bin Salman Al Saud. He purported in a recent op-ed in The Washington Post that his much-anticipated visit will cover a broad array of subjects, including security in the region, energy, and “reorient—but not rupture—relations.” But the president stopped short of saying if he would address the murder of journalist Jamal Khashoggi at the Saudi embassy in Turkey.

While industry observers note that Riyadh does not possess the additional capacity to expand output, the president might convince the Kingdom to inject enough crude in the global markets to help ease the global imbalance.

Last month, French President Emmanuel Macron revealed to Biden that Saudi Arabia and the United Arab Emirates (UAE) were already pumping near their limits, with the Saudis only able to add approximately 150,000 barrels per day (bpd).

Domestic oil producers, however, are upset by the president’s trip to the Middle East. Rather than meeting with questionable regimes and depending on foreign oil to keep the nation’s lights on, “there’s a solution beneath our feet,” says Mike Sommers, the American Petroleum Institute president and CEO.

Pump jacks operate at sunset in an oil field in Midland, Texas, on Aug. 22, 2018. (Nick Oxford/Reuters)

President Biden will meet with Saudi officials to discuss the possibility of OPEC increasing production, Sommers told reporters during a conference call on Thursday.

“Saudi Arabia plays a key role in the global oil market and maintaining a constructive dialogue between our two nations is important. But if the administration is serious about increasing supply, they should be meeting with producers here at home instead of looking to governments overseas,” he said.

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