Market Close: July 15 Up

President Joe Biden said he expects further oil supply increases from Saudi Arabia to help tame fuel costs at home after a landmark meeting with the kingdom’s rulers.

Biden’s trip didn’t result in an immediate pledge for a production hike, but US officials said they were confident that Riyadh would lead the OPEC+ alliance to an agreement for a gradual boost.

“I’m doing all I can to increase the supply for the United States of America, which I expect to happen,” Biden told reporters. “The Saudis share that urgency. And based on our discussions today, I expect we’ll see further steps in the coming weeks.”

Biden’s meeting with King Salman bin Abdulaziz and his son, Crown Prince Mohammed Bin Salman, in the port city of Jeddah comes after high fuel prices compelled the president to backtrack on an earlier vow to isolate Riyadh over the 2018 killing of Washington Post columnist Jamal Khashoggi. Gasoline remains near record levels of $5 a gallon in the US, spurring discontent as midterm elections approach.

His visit sets up the Aug. 3 meeting of the Organization of Petroleum Exporting Countries and its allies, which will calibrate output for September and beyond, as the next significant date on the oil-market calendar. Still, with oil prices tumbling from recent highs as recession risks grip markets, the picture could still change in the run-up.

Adel Al-Jubeir, Saudi minister of state for foreign affairs, said supply decisions would be based on ongoing assessments of the market. He also stressed that Saudi Arabia would continue to work with OPEC+, the alliance including Russia — whose oil revenues the U.S. is trying to squeeze because of its invasion of Ukraine.

“We assess demand and we work in consultations with other oil producers in OPEC and OPEC+ to make sure that we have adequate supplies,” the Saudi minister told a separate news conference. “We base that on fundamentals, not on speculations, not on hysteria, not on geopolitics.”

The US welcomed production hikes that had already been announced by the Saudis and other OPEC+ members for this month and next.

“Saudi Arabia has committed to support global oil market balancing for sustained economic growth,” the White House said in a statement. “These steps and further steps that we anticipate over the coming weeks have and will help stabilize markets considerably.”

But any further increases are expected to be modest as the Persian Gulf heavyweights choose to preserve their remaining spare capacity amid supply disruptions ranging from Libyan unrest to sanctions against Russia. The buffer of idle output has dwindled to “razor-thin” levels of just over 2 million barrels a day, according to the International Energy Agency.

Under the terms of the existing OPEC+ agreement, Saudi Arabia’s production is due to reach almost 11 million barrels a day next month, a level it has only rarely maintained in its decades as a crude exporter. Any further increases would test the kingdom’s maximum sustainable capacity, which state-run giant Saudi Aramco puts at 12 million barrels a day.

The White House statement also announced a clean-energy partnership between the US and the kingdom, which will include Saudi investments to speed up the transition away from fossil fuels to clean energy. The framework will focus on solar, hydrogen and nuclear, with a mix of public and private-sector involvement.

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