Washington sees OPEC+ oil production cuts as a political ‘blow against Biden,’ says Dan Yergin
Washington sees OPEC+’s decision to slash oil production by more than 2 million barrels a day as political interference and a “blow” against U.S. President Joe Biden, said Dan Yergin, vice chair of S&P Global.
On Wednesday, the group of some of the world’s most powerful oil producers agreed to impose deep output cuts to shore up crude prices despite calls from the U.S. to pump more to help the global economy.
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“This is seen as, first of all, a blow against Biden who came to Saudi Arabia. Secondly, it’s seen as somehow political interfering in the U.S. election, although the cut doesn’t go into effect until November.”
The decision, which was made at OPEC and OPEC+’s first in-person meeting in Vienna since 2020, would mark the biggest cut since the pandemic began.
Biden visited the Saudi government in July in a bid to ramp up oil production and control soaring energy prices.
Oil prices rose to a three-week high on Wednesday after the announcement following three days of rallying. The West Texas Intermediate climbed 1.4% to $87.76 per barrel, while the Brent crude rose 1.7% to $93.37 a barrel in early trade.
Oil as a weapon
“The OPEC+ might find itself against the West with weaponized oil,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank, in a note.
He wrote that the oil supply cuts are “seen partly as a protestation of Russian oil price caps” and confirms the organization’s “naked desire for price buoyancy, not just support.”
Representatives of OPEC member countries attend a press conference after the 45th Joint Ministerial Monitoring Committee and the 33rd OPEC and non-OPEC Ministerial Meeting in Vienna, Austria, on Oct. 5, 2022. “There seems to be a mini battle between [Strategic Petroleum Reserve] releases in the White House and what’s going on with OPEC+,” said Bill Perkins, CEO of Skylar Capital Management.
Vladimir Simicek | AFP | Getty Images
A production cut of around a million barrels a day would have led to price gains without compromising on volume, but the larger reduction shows the group’s “disregard for the economic woes of, and geo-political alignment with, global partners,” Varathan added.
Yergin, likewise, said the agreement is seen “not in economic terms” but as being more political in nature.
The decision also comes as the EU reached an agreement on capping Russian oil prices as part of a new sanctions package.
“The Russians have signaled in this case and other cases that they are going to do everything they can to frustrate a price cap on oil,” Yergin said.
‘Dangerous game’
“There seems to be a mini battle between [Strategic Petroleum Reserve] releases in the White House and what’s going on with OPEC+,” said Bill Perkins, CEO of Skylar Capital Management.
“In the end, OPEC+ is going to win that battle, the SPR will eventually run out of food it can withdraw. So that’s a dangerous game that we’re playing there,” he said.
A few weeks ago, the U.S. Energy Department announced it would sell up to 10 million barrels of oil from the SPR for delivery in November.
Perkins added that the point that the group wants to make is that price signals from the markets aren’t enough to “induce the investment or the supply response” that it needs.
Global oil prices skyrocketed to more than $120 per barrel after the Russian-Ukraine war broke out, but have tapered to slightly above $80 per barrel in the week before OPEC+’s decision to slash production.
However, when asked if the alliance’s decision would encourage more investment in crude oil production and infrastructure, Perkins struck a cautious note.
“It’s a good bet, but it’s a scary world right now,” he said.
“People might feel a little bit more brave to brave the macro economic headwinds … That being said, if there’s a giant recession, energy demand is one of the first things to go.”
On today’s test-acular episode of Quick Charge, it’s a new day and a new Chinese ADAS test for Tesla to conquer – but this one’s got a LOT more pedestrian carnage to parse through! We’ve also got some great e-bike deals from Retrospec and a bladder-busting Hyundai.
Today’s episode is brought to you by Retrospec – the makers of sleek, powerful e-bikes and outdoor gear built for everyday adventure! To that end, we’ve got a pair of Retrospec e-bike reviews followed up by the updated Hyundai IONIQ 6 with nearly 350 miles of range from its updated long-range battery. With that, Hyundai now has the longest range Korean EV on the market, while Texas is adding megawatts of battery energy storage to beef up its troubled grid, and it’s doing so faster and cheaper than ever before.
Plus: Quick Charge listeners can get an extra 10% off the price of their next awesome e-bike by using code ELECTREK10 at retrospec.com!
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Although many were disappointed to hear that GM was moving away from Apple CarPlay and Android Auto, it appears that it will continue to offer them in at least some overseas markets. Cadillac plans to continue offering the popular feature in EVs sold in Australia and New Zealand.
Cadillac EVs keep Apple CarPlay, Android in Australia
Only two GM electric vehicles remain on sale in the US with CarPlay and Android Auto: the GMC Hummer EV and the Cadillac Lyriq. However, that will soon change.
GM is phasing out the popular connectivity tech in favor of its own Google-based infotainment system. The company argues that an in-house system will offer drivers more control in future EVs. GM, like many automakers, also plans to offer upgrades and subscription-based features.
In at least a few overseas markets, it’s taking a different route. Cadillac announced it will launch a new Connected Services system later this year, featuring Google built-in, for EVs sold in Australia and New Zealand.
The Cadillac Connected Services offers a suite of connectivity features, including a mobile app and over-the-air (OTA) updates.
Managing Director of GM Australia and New Zealand, Jess Bala, said that “The inclusion of our new Connected Infotainment experience also means that Cadillac owners will have the very latest in Google’s class-leading services, from Google Maps to the Google Assistant.”
Cadillac’s new mobile app enables drivers to check the battery level, precondition the cabin, run vehicle diagnostics, and more.
Despite the new service, a GM spokesperson told CarExpert that “All Cadillac Lyriq, Lyriq-V, Vistiq and Optiq vehicles coming to Australia and New Zealand will offer Cadillac Connected Services as well as wireless smartphone projection,” meaning Apple CarPlay and Android Auto.
The new service will roll out later this year, starting with the Lyriq. All 2026 Cadillac Lyriq buyers will receive an eight-year subscription to the new Connected Services.
Those who have already taken delivery, or do so before the service rolls out, will be offered a free upgrade from a service location.
Next year, Cadillac will launch the entry-level Optiq and three-row Vistiq. The high-performance Lyriq-V is also set to join the lineup.
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Tesla is considering building a smaller pickup truck after the Cybertruck has officially become a complete commercial flop.
When first unveiling the Cybertruck and its polarizing design, CEO Elon Musk did mention that if the controversial truck proves unsuccessful, Tesla would build a different, less polarizing one. He even suggested that Tesla already had a plan B ready to go.
The Cybertruck is now officially unsuccessful.
Tesla planned for a production of 250,000 units per year, and Musk said that it could ramp up to 500,000 units a year.
Yet, the automaker is currently selling the Cybertruck at a rate of about 20,000 units per year. It’s a commercial flop.
The vehicle program is selling at approximately 10% of the installed production capacity.
Despite the failure, Tesla has not yet greenlit a replacement, but Tesla VP of vehicle engineering, Lars Moravy, recently discussed the potential of Tesla making a “smaller pickup”:
“We always talked about making a smaller pickup. I think in the future, as more and more of the robotaxi comes into the world, we look at those options and we think about, OK, that kind of service is useful not just for people, but also for goods. [..] We’ve definitely been churning in the design studio about what we might do to serve that need for sure.”
It’s unclear whether Moravy is explicitly referring to a smaller Cybertruck or a smaller pickup designed for cargo.
One thing is clear from the executive comment: Tesla’s priority is “robotaxi”.
Electrek’s Take
This autonomy thing is truly ruining Tesla. They are putting everything through the lens of autonomy, even this comment about making a smaller pickup truck includes “as more of the robotaxi comes into the world”.
The result is that in the last 5 years, Tesla has released a single new vehicle: the Cybertruck.
Tesla should have launched five new vehicle programs during that time, but instead, it focused only on autonomy and failed to deliver it. By now, Tesla should have two cheaper vehicle programs, a real full-size third-row SUV, the next-generation Roadster, and a minivan.
Now, Tesla finds itself having given up its lead in electric vehicles for a fake lead in autonomy, which won’t deliver real value for likely another 5 years, while competition from Waymo, Baidu, and others is pulling ahead.
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