House Republicans threaten pushback on Saudi Arabia amid oil market slump

A number of House Republicans are warning Saudi Arabia to ease oil production as a trade war between the kingdom and Russia has flooded markets and depressed oil prices.

Lawmakers, led by House Minority Whip Steve Scalise (R-La.), said they were concerned “with the Kingdom’s actions to artificially distort global crude oil markets as countries around the world struggle to address a growing economic and health crisis fueled by the COVID-19 novel coronavirus pandemic.”

The letter to Crown Prince Mohammed bin Salman comes as the Organization of the Petroleum Exporting Countries (OPEC) prepares to meet Thursday to discuss production levels.

Oil prices in March hit the lowest level in 18 years, with prices now hovering in the mid-$20 range after remaining around $55 in February. 

While coronavirus has limited people’s ability to travel, the global market has been overwhelmed with supply — harming U.S oil producers who must rely on the more expensive fracking process to produce oil.

“As a result of the Kingdom’s March decision to artificially depress global crude prices, thousands of American workers employed directly by our country’s oil and gas producers, as well as thousands more employed in related industries, face increased financial and economic uncertainty. While other global actors use oil and gas markets as political leverage, the Kingdom must be a model of leadership,” lawmakers said. 

President Trump has floated that both Russia and Saudi Arabia may be willing to reduce production by 15 million barrels.

But those comments have been followed by threats to possibly impose tariffs on foreign fuel sources — a concerning idea to many in the oil industry — or imposing production cuts on U.S. producers.

House Republicans alluded to the potential for consequences amid slumped oil prices.

“Failure to address this energy crisis will jeopardize the joint efforts between our nations to collaborate economically and militarily,” they wrote. “If the Kingdom fails to act fairly to reverse this manufactured energy crisis, we would encourage any reciprocal responses that the U.S. government deems appropriate.”

The Saudi Arabian Embassy in Washington did not immediately respond to request for comment. 

Lawmakers in the Senate last month urged Saudi Arabia to leave OPEC, channeling the message through Secretary of State Mike Pompeo. 

“The Organization of Petroleum-Exporting Countries is a relic of a cartelized past, one that burdens the Kingdom with free-riders and forces it to shoulder the lion’s share of every production decision,” lawmakers wrote in a letter signed by Sens. Lisa Murkowski (R-Alaska), Kevin Cramer (R-N.D.), Dan Sullivan (R-Alaska), James Inhofe (R-Okla.), John Hoeven (R-N.D.) and Cindy Hyde-Smith (R-Miss.).

Updated at 4:32 p.m.