Ongoing discussions aim to ensure “a stable and affordable energy supply in global markets,” a White House official said.
The United States is “in regular contact at high levels with Saudi Arabia to ensure stable and affordable energy supplies to global markets,” national security adviser Jake Sullivan said.
Friday’s statement follows estimates from the International Energy Agency (IEA) that oil production cuts – which Saudi Arabia and Russia have extended until the end of 2023 – will lead to a deficit substantial market share until the fourth quarter of this year due to strong demand.
Sullivan confirmed to reporters at a White House press briefing that US President Joe Biden had a “brief exchange” with Saudi Crown Prince Mohammed bin Salman during the Group of 20 (G20) summit in New Delhi earlier in September.
The main topic of this discussion was the announcement of a new economic corridor that would connect India, the Middle East and Europe by rail and sea, he said.
“A significant supply deficit”
OPEC and its allies, known as OPEC+, began limiting supplies in 2022 to support the energy market.
The Saudi-led oil group produces around 40% of the world’s crude oil, meaning its policy decisions can have a major effect on oil prices.
This month, benchmark Brent crude rose above $90 a barrel for the first time this year after OPEC+ leaders Saudi Arabia and Russia extended their combined cuts by $1.3 million barrels per day (bpd) until the end of 2023.
Production cuts of more than 2.5 million bpd by OPEC+ members since the start of 2023 have so far been offset by higher supplies from producers outside the alliance, including the United States, Brazil and Iran, still under sanctions, the IEA said.
“But from September onwards, the loss of OPEC+ production… will lead to a significant supply gap until the fourth quarter,” he said in his monthly oil report.
However, the absence of cuts early next year would tip the scales towards a surplus, the agency said, noting that inventories will be at uncomfortably low levels, increasing the risk of another surge in volatility in a fragile economic environment.