Commodities Corner: Why Biden’s visit to Saudi Arabia is unlikely to contribute much to oil’s price decline

by | Jul 14, 2022 | Stock Market

President Joe Biden is in the Middle East late this week and the pressure is on for the U.S. to look to Saudi Arabia, the world’s largest oil exporter, for more barrels of oil. Limits to oil production capacity, however, are likely to be a difficult obstacle to overcome, analysts said.

Biden is visiting the Middle East region from July 13 to July 16, with stops in Israel, the West Bank, and Saudi Arabia. The meetings with key leaders in the region include Saudi Arabia’s King Salman and Crown Prince Mohammed bin Salman, the kingdom’s de facto ruler. Biden will not only be seeking additional barrels, but also a “redirection of exports to Europe to backfill” a potential loss of 2 million barrels a day of oil from Russia, with the “most serious energy sanctions set to take effect in several months’ time,” analysts at RBC Capital Markets, led by Helima Croft, head of global commodity strategy, wrote in a note. They said Saudi Arabia will likely agree to “loosen the oil taps on the back of the Biden visit, but the leadership will still probably strive to find a way to do it within the context of the current OPEC+ agreement that extends …

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