By Jarrett Renshaw, Maha El Dahan and Aziz El Yaakoubi
JEDDAH, Saudi Arabia (Reuters) -The United States is not expecting Saudi Arabia to immediately boost oil production and is eyeing the outcome of the next OPEC+ meeting on Aug. 3, a U.S. official told Reuters on Friday.
The comments come hours before U.S. President Joe Biden is set to land in Jeddah on a trip that is designed to reset the U.S. relationship with the kingdom and during which energy supply, human rights and security cooperation are on the agenda.
Saudi Arabia, alongside the United Arab Emirates, holds the bulk of spare capacity within the OPEC+ group, an alliance between the Organization of Petroleum Exporting Countries (OPEC)and other exporters most notably Russia. Biden is expected to have direct meetings with Saudi and UAE heads of state during his trip.
But the kingdom has repeatedly indicated it would not act unilaterally.
Brent crude prices are trading at just under $100 a barrel, having hit a 14-year high of $139.13 in March, as investors weigh new COVID-19 lockdowns in top importer China and recession fears.
“Saudi Arabia prefers to manage the market through the Organization of the Petroleum Exporting Countries and allied producers (OPEC+), not through unilateral moves,” Ben Cahill, a senior fellow at the Center for Strategic and International Studies, wrote in a recent analyst note.
“Saudi energy minister Abdulaziz bin Salman has consistently emphasized the importance of OPEC+ cohesion, including a central role for Russia,” he said.
Anwar Gargash, diplomatic advisor to UAE President Sheikh Mohammed bin Zayed, also said on Friday his country wanted a more stable oil market and that it would abide by OPEC+ decisions.
“The UAE is very much pro supporting and following U.S. discussions with Saudi Arabia on oil because we are part of the greater OPEC group, OPEC+, so we would very much like to see more stability in the market and ability to produce more and we are going to follow where the group will follow,” he said.
The U.S. is eager to see Saudi Arabia and its OPEC partners pump more oil to help bring down the high cost of gasoline and ease the highest U.S. inflation in four decades.
However, spare capacity within OPEC is running low, with most producers pumping at maximum capacity. It is unclear how much extra Saudi Arabia could bring to the market and how quickly.
Biden said recently that he would not ask Saudi leaders directly to increase oil production. Instead, he would continue to make the case that all Gulf states should raise oil output, he said.
OPEC+ decided last month to increase output targets by 648,000 barrels per day (bpd) in August, ending record production cuts that it brought at the height of the pandemic to counter collapsing demand.
(Reporting By Jarrett Renshaw, Maha El Dahan and Aziz El Yakoubi; additional reporting by John Irish in Paris and Ahmad Ghaddar in London; Editing by Kirsten Donovan)
