Briefing With Senior State Department Official On the Global Oil Market


Office of the Spokesperson

Via Teleconference

MODERATOR: Okay, sir, thank you for making time for this. I’ll just go over the ground rules one more time now that you’re on the line.

SENIOR STATE DEPARTMENT OFFICIAL: Please, thanks.

MODERATOR: Folks, if you’re not speaking, please mute your line so that it’s as clear as possible. ’s briefing will be on background, so he should be referred to as a senior State Department official. That’s how the transcript will come out. After his opening remarks, if you would like to ask a question, please send me an SMS at and I’ll call on people in the order of the message received. And please, the conversation is embargoed until the end of the call.

That’s all. , over to you, sir.

SENIOR STATE DEPARTMENT OFFICIAL: Yeah, thank you. Thank you, everyone, for joining. It’s been (inaudible) time for all of us. The U.S., or the world really, is – a period of considerable global uncertainty. The coronavirus, the continuing impact it’s having around the world, obviously you’re writing about it, you’re monitoring it. It’s on everyone’s mind and every family’s mind. So we’re keenly focused on ensuring the safety of all U.S. personnel and around the world.

It’s having a significant impact on global – the global economy. We don’t know the extent of that, and I’ll let others who really have the focus on that speak to those economic impacts, but we’re still in the throes of this considerable uncertainty. We now have a situation with respect to some of that uncertainty in terms of the global market because of the virus has had meaningful ramifications in terms of uncertainty, in terms of energy supply patterns and demand patterns, has already – has been affecting business across the globe.

We also now face this ongoing – as some in the media have described it as an oil pricing war or market share war, which only adds additional uncertainty to the global market. We’ve been engaged – multiple parts of the U.S. Government have been engaged, encouraging greater calm to the market when the (inaudible) economy is facing some real challenges. We’ve called on all parties to refrain from taking actions that can contribute greater volatility and uncertainty given the scale of the current coronavirus issues and the related demand disruption that’s been occurring as a result of that.

The United States has engaged through multiple diplomatic channels to encourage a rethink and provide greater confidence to global markets, and those – and restore that market confidence. The – we believe that returning to kind of a more transparent commercial environment will again enable the ingenuity and entrepreneurial spirit of the U.S. private sector and energy sector to thrive and to continue to be a meaningful contributor to global economic prosperity.

That’s the frame through which we’re looking at the current situation. And again, this is an evolving issue and engagements are ongoing.

With that, I will pause and invite questions. Thank you.

MODERATOR: Thank you, sir. The first question is from Tim Gardner from Reuters.

QUESTION: Thanks, , for holding this. I wonder if you could describe how U.S. officials are working with Saudi Arabia. After all, it’s been responsible for decades in terms of being a market stabilizer. How is it working with Saudi Arabia? Is there anything to this notion that the U.S. is suggesting that it might want to consider leaving OPEC? And also, how would the State Department work with this Energy Department official that would be – be soon going over to Riyadh to work with the State Department team there?

SENIOR STATE DEPARTMENT OFFICIAL: Yeah, thanks, thanks. Look, we don’t get into the intricacies of – excuse me – diplomatic engagements with any country, including the Kingdom of Saudi Arabia. Of course, the kingdom has been an important partner in the region, an ally and a friend, and so we have a very close relationship across multiple fronts. So it’s a deep – it’s a deep relationship that has a lot of areas of close collaboration.

I can’t speak to notions of the kingdom’s desire or interest in or appetite to leave OPEC. I haven’t – that hasn’t come across me, so I can’t speculate on that. I mean, whether – OPEC has long asserted that it serves a role in terms of market stability. We – I don’t think anyone sees – right now that’s I kind of think called into question. So I can’t speak to also other departments’ personnel maneuvers.

MODERATOR: Okay, next question from Nick Wadhams, Bloomberg. Nick.

QUESTION: Hi, . Thanks very much for doing the call. Just two questions for you: Do you believe that the Saudi decision to basically open the floodgates on production and the actions it’s taken are helpful to the U.S. economy or to its own economy? And also, could you say whether the U.S. is considering sanctions on Russia as a way of stabilizing prices? Thanks.

SENIOR STATE DEPARTMENT OFFICIAL: So the first question was whether we – how do we view this as economically harmful. I don’t have a – I can tell you that we’ve been hearing from both members of Congress who represent states – oil – energy-producing states, as well as various companies, and they claim that they’re very concerned with the ongoing volatility in the market. A lot of these companies and I think you guys have written – at the last quarter of last year started writing about some financial challenges of some companies, and so I think that different companies’ business decisions was playing out in various ways, and not all for the best for those companies.

What I’ve heard is that this kind of accentuates that glide path for trouble for some companies and that no one likes that, and I can tell you that members of Congress are hearing about that. So I think that we’ll continue to take on that. Of course, we focus on the international file, not the domestic file, and – but we’re certainly hearing from companies and those who represent those companies in Congress about the concerns that this is having, and just the volatility on top of an existing really significant economic uncertainty.

In terms of – we don’t speak about sanctions. We don’t forward-look sanctions. That’s starkly against our policy to speak about that, so I’m not going to comment on that. We continue to – I’ve identified multiple instances, not just the – we here at the department or within the Executive Branch, but also Congress has also cited multiple instances where Russia has used energy as a malign actor, used it for malign purposes, and I’ll just let that stand for itself. Thanks.

MODERATOR: Next question from Emily Meredith, Energy Intelligence.

QUESTION: Hi, . Thanks for doing this. Hi.

SENIOR STATE DEPARTMENT OFFICIAL: Sure.

QUESTION: So a question – we’ve heard today some overtures from officials in Texas and talk between the Texas railroad commissioner and Barkindo. Do you believe that the U.S. federal government should be in the position of going to Saudi Arabia and perhaps to Russia and saying, look, there does exist this authority to rein in production on the U.S. side, which obviously has been a complaint for a long time and is something that the Texas commissioner is saying? And if so, can you just talk a little bit about the role between the federal officials and the state officials here? It seems quite muddled.

SENIOR STATE DEPARTMENT OFFICIAL: Well – excuse me – I have seen – I am aware of the Texas railroad commissioner, or perhaps chairman, speaking to the secretary general of OPEC. That’s – but those are wholly within state matters, and I’ll leave it to them to make those levels of engagements.

From a federal level, we have no ongoing official engagements with OPEC. It’s a cartel, and we don’t from a federal level have any – none to my knowledge – any ability to restrict the private sector from taking actions it wants to take. So I really have no – nothing to add, other than what I’ve seen reported with respect to the commissioner, the commissioner’s discussions. I think it – I’m assuming that his outreach is perhaps a factfinding. That’s what it indicated in his tweet, anyway. And it’s interesting to see how that will mature over time or not. I think more information is always good, though.

QUESTION: So you don’t think there’s a role for the U.S. Government either, at whole or at the state level, to join with OPEC here?

SENIOR STATE DEPARTMENT OFFICIAL: My file is an international one, not a domestic one, so I can’t really speak to that. And I don’t know what other mechanisms would – could exist under federal authorities that would – that could allow something like that to happen.

MODERATOR: Okay. Tim Puko, Wall Street Journal.

SENIOR STATE DEPARTMENT OFFICIAL: Hey, Tim.

QUESTION: Hi, thanks for doing this. If I could ask you one, like, very quick question first, just a follow-up on the Texas issue: So have you spoken with them at all, or even communicated anything from the federal government to those officials in Texas?

SENIOR STATE DEPARTMENT OFFICIAL: I have not. But again, I’m – that’s not unusual. I mean, I handle foreign policy, and that’s domestic, U.S. domestic stuff. I just saw reporting or a tweet or something.

QUESTION: Okay. So the – my bigger question, then, is about – is about that ongoing diplomacy. You guys have been pretty communicative about what has already been happening over the past week and a half, almost two weeks now, at least in general terms. I’m wondering if you could explain, like, in all this talk of a ramp-up with diplomacy, what all the oil and gas companies are asking you for. Like, what is the next level? What escalation – what things would mark an escalation? What is possible? And then at what point do you, does the Trump administration just straight ask the Saudi Government to cut back production?

SENIOR STATE DEPARTMENT OFFICIAL: Yeah, I mean, what we’re calling on is for all stakeholders – the world is – first we have to recognize that the world is – faces considerable uncertainty. Whether it’s – no matter how a country is developing its GDP, whether they’re an oil producing country or energy producing country or not, the world faces considerable uncertainty. And we urge all global stakeholders to avoid taking any actions that could exacerbate the existing uncertainty and introduce more volatility. That’s what – that’s the tenor of all of our engagements, and regardless of with whom those might be.

MODERATOR: Okay. Robbie Gramer, Foreign Policy.

QUESTION: Hi, can you hear me?

SENIOR STATE DEPARTMENT OFFICIAL: Yep.

QUESTION: Thank you for doing this. Two questions. One, has your bureau or State had any conversations with the Russian counterparts about this oil price war? And what message would you like to send the Russian Government?

And then, two, what type of knock-on effects could plunging oil prices have on struggling economies that are reliant on oil revenue? So not only countries like Iraq, but also Sudan and South Sudan. Thanks.

SENIOR STATE DEPARTMENT OFFICIAL: Yeah. It’s an important point, and that’s why in my earlier response I was kind of thinking that along – that in mind. Because a lot of countries are, around the world, regardless of their relative state of fragility – if they are a producing country of any type or any scale, it tends to have it as a pretty important component of their economy. And the existing demand destruction that the world is seeing just from the virus has already thrown those countries into considerable turmoil.

The – excuse me – over-supply, the supply glut that we’re seeing right now and the relative price impact, again, that would have – these things would have played out as a matter of normal market response because of coronavirus uncertainties. But the action of increased supplies in the market just exacerbates an existing challenge, which only creates broader headwinds for those countries.

Countries – energy is an important component to foreign policy. It’s important as it is because having a reliable energy sector is often foundational to economic security of many countries. And so when that’s thrown into question, it calls – it creates a whole host of additional knock-on challenges for those countries.

We’re very, very much concerned about that, and I would suggest – I kind of am thinking about the International Energy Agency head Fatih Birol’s recent comments on this question. And I would suggest taking a – take a look at some of his comments on this. I think it was pretty – pretty compelling and concerning.

I kind of – we don’t go into discussions – on your other question, we don’t go into specific discussions on our – any diplomatic engagements with any countries, nor do we telegraph any kind of new actions, sanctions or otherwise. We do call and we have called on, as well as Congress has called on Russia many times for using its energy as a political weapon. And what we’re not going to do is go into any private discussions we’ve had with – we’ve had with any country. What we do is – are calling on all actors to look at this particular moment of global uncertainty and economic headwinds and take responsible actions to help us collectively kind of get through this together.

MODERATOR: Great. Ben Lefebvre from Politico, next.

QUESTION: Hi, thanks for taking the call. I was just looking for the mute button again. I was just going to chime in on a couple things.

One was that I guess the Texas Railroad Commission, for those kind of keeping track, today announced that they were not so hot about (inaudible), so that the (inaudible) to OPEC was not an official action on their part.

But my question was going to be: How hard has it been – as the State Department kind of reaches out to its foreign partners to kind of try to settle the market, how hard has it been, or have you guys had to sit down with the President and with his tweets of low gasoline prices are great for all kind of stuff, has that muddied the waters at all when you’re trying to deal with foreign partners?

SENIOR STATE DEPARTMENT OFFICIAL: I’m sorry, could you – I’m not sure I got the question. You mentioned —

QUESTION: Yeah. Has the President’s tweets about the boon of low gasoline prices made it harder for you guys to negotiate with foreign partners about, yeah, we’re asking you to cut out – lowering – or to lower or step off the accelerator on oil production, even though the President is singing the boons of high oil production and low gasoline prices, has that confused – have you heard from partners that that’s confused the message out of the United States a little bit?

SENIOR STATE DEPARTMENT OFFICIAL: No.

MODERATOR: Okay, last question will be from John Hudson.

QUESTION: Hi, thanks. And just piggying back on that is that you’re not hearing mixed messages because the foreign countries just don’t take those tweets seriously as the actual negotiating position of the United States? Is that why?

And then the second question is: Just given how much low oil prices weaken the Russian state, does the State Department view any opportunities here, either geopolitically, diplomatically, or energy-wise, when it comes to having the Russians in a pinch like this?

SENIOR STATE DEPARTMENT OFFICIAL: I want to go back to the – what I was saying a few times now, which the objective here is not to finger-point but to move forward with reducing market volatility, restoring market confidence, and helping us to get through this very uncertain time when there are a lot of global uncertainties out there. Let’s remain calm. Let’s get back to working to get out of this uncertainty and encourage all stakeholders to buy into that and move forward. Thanks.

MODERATOR: All right, everybody. That concludes today’s briefing. Again, just to recap, that was on background and we will endeavor to put out the transcript as soon as possible. The embargo is lifted. Thank you very much, , for your time.

SENIOR STATE DEPARTMENT OFFICIAL: Thanks, all. Bye. Have a good weekend.



* This article was originally published here



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