A Q&A with Samantha Gross of the Brookings Institution on what OPEC’s cuts mean and where things might go from here.
Ignoring months of lobbying by the White House, Saudi Arabia and other US allies in OPEC+ moved last week to slash the amount of oil on global markets. The countries of OPEC+ — a cartel of oil-producing nations — announced on October 5 that they would be decreasing the cartel’s production quota by 2 million barrels per day. The decision will likely drive up energy prices, causing more pain for an already slowing global economy.
US officials expressed acute frustration with the cuts. President Joe Biden this week said there would be “consequences” for Saudi Arabia. The decrease looks like a “smack in the face” to the president, one energy analyst said, after Biden traveled to Riyadh in July and memorably fist-bumped Saudi Crown Prince Mohammed bin Salman — a controversial gesture amid reports that MBS had ordered the 2018 killing of Saudi-American journalist Jamal Khashoggi.
Sen. Chris Murphy (D-CN) accused Washington’s Arab allies of choosing Moscow and Beijing over the United States. Sen. Robert Menendez (D-NJ), chair of the Senate Foreign Relations Committee, called for freezing all U.S.-Saudi cooperation, including a halt to arms sales and security cooperation. Rep. Tom Malinowski (D-NJ) said he would introduce a bill — previously proposed by Republicans — to remove US troops and defense systems from Saudi Arabia.
But such responses seem to miss a crucial point about OPEC+’s motivations. That’s what Samantha Gross, director of the Energy Security and Climate Initiative at the Brookings Institution, a Washington-based think tank, told me in a recent conversation.
Gross’s take is straightforward: Arab states are simply pursuing their self-interest in keeping oil prices high. She cautioned against seeing the OPEC+ decision as a choice by the group between the US and Russia. Today is not like the Cold War, when many Middle Eastern states balanced between Washington and Moscow, seeking to extract maximum benefits from both superpowers and hedging in case either bloc won.
Besides, although the cut might boost oil prices, Gross says the prospects for Russia’s future oil revenues are potentially quite dim, as the G7 and the European Union prepare to implement new measures that could substantially reduce Putin’s proceeds from oil. Moreover, the actual production cut is likely to be around 1 million barrels per day — not 2 million — because many OPEC+ members weren’t meeting their quotas anyway, according to Gross.
I spoke with Gross last week in the wake of OPEC+’s announcement. A transcript of our conversation follows, edited for length and clarity.
Michael Bluhm
Many in the United States see the OPEC+ decision as a slap to Joe Biden. Biden traveled to Saudi Arabia a few months ago and gave a fist-bump to Mohammed bin Salman (MBS), whom his own intelligence services say ordered the assassination of journalist Jamal Khashoggi.
But instead of shoring up relations, Saudi Arabia now makes a move that will almost certainly cause oil prices to rise — which will cause gas prices to go up, harming the US economy and perhaps the global economy.
Why would longtime US allies such as Saudi Arabia and the United Arab Emirates choose to do what Moscow is asking them to do instead of what Washington wants them to do?
Samantha Gross
There are several reasons. But we need to start by not framing this as the Saudis and, to a lesser extent, the Emiratis choosing between the Russians and the Americans.
Middle Eastern states have their own interests, and they were genuinely concerned about rapidly falling oil prices and over-producing as the world was going into a recession. They did what they do in those situations: pulling back production. They have their own interests and economies to look after. And they have agency. It’s not just choosing between the United States and Russia.
Both Saudi Arabia and the UAE are US allies, and we cooperate on many things. But the US relationship with Saudi Arabia, especially with MBS, is not as cozy as it was during the last administration. I am okay with that — I see a lot of things in this Saudi regime that I find alarming. Despite the fist bump that you mentioned, President Biden and Mohammed bin Salman are not as close as President Trump and Mohammed bin Salman were. Our influence there is lower. But the production decrease was primarily about these countries doing what they thought was in their own best interests.
I don’t think this is going to be a killer for the global economy, the US economy, or President Biden. The market doesn’t like the news, but oil prices haven’t skyrocketed. If Russian oil supply ends up declining quite a bit, these Arab countries may change their minds about decreasing production. But for now, they’ve done what they think is in their best interests — and that is a sensible reaction to market conditions. I don’t think it’s necessarily meant to be a huge finger in the eye to President Biden, although it might look that way.
Michael Bluhm
Where and how much are these OPEC+ production cuts going to affect the prices of gasoline and energy?
Samantha Gross
Oil is traded on a global market. The price isn’t the same everywhere — prices differ because of transportation and type and quality of oil. But we’re going to see the effect in prices of fuels everywhere.
I’m not sure how much of an effect it will have. Oil markets are tremendously uncertain right now. We might be entering a recession. That’s a great source of uncertainty.
Future Russian production is also very uncertain, as are the effects that sanctions will have.
A third wild card is that OPEC+ announced that they were cutting production quotas by 2 million barrels per day. But production is not going to fall by 2 million barrels a day because many OPEC producers weren’t meeting their quotas.
You’re not going to see a reduction of 2 million barrels a day — you might see half that. Two million barrels sounds like a big number, and they wanted the market to see a big number. But production isn’t going to fall that much.
It’s really difficult to look at past decreases in production and figure out what people might see at the pump. Conditions are different every time, and the conditions this time are particularly different and particularly uncertain.
Michael Bluhm
OPEC+ clearly wants oil prices to rise. But higher oil prices would mean more oil revenue for Vladimir Putin, which would help fund the war in Ukraine. What could this cut in production quotas mean for Russia and Ukraine?
Samantha Gross
I’m sure that the Russians were in OPEC+ arguing for a decline in production, but Putin’s future oil revenues depend on a lot of other things. The bigger questions for Russian production are upcoming European sanctions and the American proposal to put a global cap on the price of Russian oil.
That’s the big deal, and the bigger of the two for Russia is the price cap — what the cap is and how well it works. For the time being, Russia is certainly happier to see higher oil prices. Their oil is selling at a discount now because people don’t want to buy it.
After European sanctions go into effect in December, it will become more difficult to buy Russian oil. Those sanctions forbid EU and UK companies from shipping, financing, or insuring Russian oil. That would put a real dent in Russian oil’s ability to reach the market.
Michael Bluhm
Enforcing a global price cap is daunting, but even the countries that don’t participate could have more leverage to demand below-market prices from Russia.
Samantha Gross
And if that happens, that is considered a success for the policy. People at the Treasury Department understand that that’s going to happen, regardless of whether countries formally participate in the policy. They’re like, “Lowers Russian revenues? Works for us.” Those are intended consequences.
Michael Bluhm
You say that the production decrease might not do much damage to the global economy. Why do you say that? Are there other potential sources of oil to make up the shortfall from OPEC+?
Samantha Gross
There’s not an obvious source of new production to fill in the cuts. The question is where demand is. No new oil is immediately going to replace those cuts. If oil prices are high and stay high, then you’ll see additional production — particularly from the United States, where we can increase production quickly.
But the open question is much more about demand. Where will demand go in light of the global economy, supply chain issues, the potential slowdowns in Europe due to Russia’s cut-off of natural gas, and a slowdown in China?
Michael Bluhm
Biden has said that his trip to Saudi Arabia in July was not primarily about oil. Even though he talked about oil, the trip was intended to promote US goals in the region, especially the normalization of Israel among Arab countries.
Samantha Gross
He was asking for a production increase from the Saudis, but he was never going to get that because the Saudis didn’t have more oil to give.
Michael Bluhm
Energy analysts have made a couple arguments about the effects of Russia’s invasion of Ukraine.
One is that the invasion will drive up oil and gas production in the United States as companies try to replace the Russian imports that European countries want to stop buying. Another argument is that the war will accelerate the drive to develop renewable energy as governments move to decrease their reliance on dangerous petro-states such as Russia and Saudi Arabia.
Samantha Gross
I don’t think those two options are mutually exclusive. The world has already been focusing on the energy transition away from fossil fuels.
Russia is shooting itself in the foot with its current behavior because Russia, as the world’s largest energy exporter, was going to have problems anyway. By invading Ukraine, they’ve taken that challenge and moved it forward in time. And they’ve made it steeper because now the world is trying to specifically cut out Russian fossil fuels, particularly in Europe. And Russia isn’t well-suited to sell oil to the markets that still want its oil because of shipping and location.
US oil and gas production are expanding now in response to the market, but I don’t think that’s necessarily anathema to an energy transition here or anywhere else. We have to feed the energy system that we have today. While we make the transition away from fossil fuels — or while we are working on getting away from Russian fossil fuels — we’re going to need something to fill in.
Both things can be true: increased US fossil-fuel production and a faster transition away from fossil fuels. It may be environmentally advantageous to transition by temporarily increasing US production because we have stricter environmental standards than the Russians do. We release much less methane from our natural-gas production, for instance. A switch from Russian fossil fuels to American fossil fuels, as we transition, could be a net positive for the climate, as long as we don’t lose track of making the transition.
That’s a nuanced answer, but you have folks who say, “We shouldn’t be producing any fossil fuel here.” As long as we’re using fossil fuel, we should produce it here because we can do better. Russian fossil fuel is a mess, so it’s not bad to replace it.
Michael Bluhm
How might the cut in production quotas affect relations between the Biden administration and Saudi Arabia and the UAE?
Samantha Gross
I don’t think this production cut is necessarily a positive for our relations, but our relations encompass a lot more than oil. The US and Saudi Arabia are strategic partners in the region for other issues, particularly terrorism and Israel. Our relationship is not entirely based on them being our gas station.
President Biden said that his recent visit to Saudi Arabia was in large part about Israel, and we have been working with them a lot to cooperate more closely with Israel on mutual interests. That’s an important part of our relationship.
They’re very imperfect partners. We don’t always agree. Very seldom do we have an ally with whom we agree with on everything. But we find where our interests align, and we work together. This is an area where our interests are diverging, but I don’t think it ends the relationship. We continue to cooperate on the things we agree on.
Michael Bluhm
How much leverage does the US have in talks about oil with Saudi Arabia?
Samantha Gross
We have more leverage than we used to because we produce a lot more oil. It used to be somewhat true that we relied on them. The world market relies on them for oil, but the fact that the United States is the world’s largest oil producer — and an oil exporter — now makes us a different kind of player. It changes the relationship; it makes the US more powerful, not less.
But then you have folks in Congress saying, “Why are we even talking to them when we’re the world’s largest oil producer? Biden, if you ‘drill, baby, drill,’ you wouldn’t have to talk to them.” No, that would never be true. Oil is a global market. But we occupy a very different place in that global market than we used to.
And instead of these higher oil prices all going into our foreign expenditures, we’re keeping some of them now. The dollars recycle in our economy, not theirs. High gasoline prices are incredibly unpopular politically, but they’re a lot easier for the US economy than they used to be because we get to keep some of the money.
Michael Bluhm is a senior editor at The Signal. He was previously the managing editor at the Open Markets Institute and a writer and editor for The Daily Star in Beirut.
Introduce yourself to the concept of “gravity” vs. “anchor” problems.
Most of us have found ourselves staring down a life problem that makes us feel like we’re absolutely trapped. You ruminate and look for solutions, but the whole affair is mired in a feeling of constraint. Just thinking about the problem can cause a tight feeling in your chest, as though you’re being squeezed by giant rubber bands, or feelings of numbness or stomach upset.
When this happens, you may be dealing with an “anchor problem” or a “gravity problem.” This terminology comes from Dave Evans and Bill Burnett, co-authors of the book Designing Your Life and co-founders of the Stanford Life Design Lab, who form a useful framework for breaking out of that hellish loop.
Anchor problems tend to occur when we’ve turned an assumed answer into a question. Evans offered me this example: Now in his late 60s, he has found love again after his wife died several years ago, and he may wonder whether he wants to write a book about, as he put it, “two old people falling in love.” This kind of question restricts Evans’s options because it assumes that he has to turn his experience into a book. Instead, he might release that “anchor” — it has to be a book — and in doing so, open himself up to different solutions. “I might ask a question like, this experience has been so life-giving. What do you want to do with that story? A book is one outcome,” says Evans.
Gravity problems are defined by immovable circumstances, either because they’re beyond your control or because you’re not willing to change them. Here, Evans generously pulled from his own life again: He lives in Santa Cruz, and his sweetheart is, depending on the day, about 75 minutes up the coast in San Francisco. “I really want to stick with this partnership, but I don’t want to have to change my lifestyle,” he said. “That’s a gravity problem.” These kinds of problems require you to accept the situation and find a way to compromise or work around it — splitting time between Santa Cruz and San Francisco, for instance.
Not all problems fall into the categories of gravity and anchor problems. They’re just two types of problems that have a special ability to make you feel stuck. Fortunately, the key to dealing with both anchor and gravity problems is acceptance, followed by reframing the problem to make it more actionable, then prototyping solutions to figure out what really works for you. “Then there’s a feeling of expansiveness, like your chest blows open,” Burnett told me. “There’s a rush of endorphins, because you see possibilities.”
Acceptance can be its own problem, too.
Before you can start brainstorming solutions to your problem, you have to accept that you want to make a change in your life. “‘Accept’ is probably the hardest part,” says Burnett. When it comes to gravity problems in particular, a lot of us find comfort in believing that we’re simply unable to achieve the thing we want, because that allows us to keep our dream in pristine condition — untouched by compromise or the threat of real-life failure.
Acceptance is also difficult to maintain. When you start prototyping solutions to your problem, you may find that the journey is much more challenging than expected, and you may sink into wishing that your circumstances were different. (Why can’t I have gotten into a relationship with someone who lives in my city?) “When you fall out of ‘accept,’ you’re back to stuck,” says Burnett.
To make acceptance a little easier, Burnett suggests thinking of it as a short-term deal: You don’t have to accept your circumstances for the rest of your life, you just have to accept them while you’re running a three-week experiment.
It’s also worth bearing in mind that acceptance is not endorsement. For a young person who’s fresh out of school with a desire to change the world and a mountain of student loans, it’s okay to accept that your priority is to get a job that will help you pay off your debt faster, rather than one focused on activism or creativity. “It doesn’t mean that you accept anything that’s wrong in the world, it just means it’s not your time to make it the sole focus of your career and life,” says Burnett.
Burnett and Evans share a background in engineering and product design, and in their books and Stanford courses, they apply the tenets of formal design thinking to finding your way through your life and career. As they like to put it, design happens in reality. “Acceptance is the door into reality,” says Evans.
Reframe, then buckle up for prototyping.
If you have an anchor problem on your hands, you’ve probably buried an answer inside your question, and in doing so, severely limited the options available to you. In order to move forward, reframe the question so that there’s no answer hidden inside it. “Do I want to go back to school to become a therapist?” might become: “How can I channel my desire to be of service to others?”
If you have a gravity problem, the reframe may simply involve accepting your constraints and moving on with your life, or it may mean figuring out how you can work around them. Say you want to earn a living as a poet. “They’re not paying poets really well right now,” says Evans. “What are the most commercially viable forms of creative writing going on in the post-internet world? That’s an actual question. As opposed to: How do I make $200,000 a year as a poet?”
Once you’ve reframed your quandary, brainstorm solutions and come up with at least three options that you can commit to testing out. Prototyping is a key part of Evans and Burnett’s approach to design, because it allows you to fail and learn. As you run each experiment, pay attention to how it’s working and how it feels.
There are two classic types of prototypes, according to Burnett and Evans. One is a mock-up, where you actually do the activity or simulate it in as realistic a way as possible. (If you’re considering joining your long-distance honey in the city where they live, you could spend your next visit only doing the mundane activities that would comprise your everyday life there.)
The second form of prototyping involves talking to people who already have the kind of lived experience that you’re after. “By hearing their story, you get this thing called narrative resonance. You know when you have two tuning forks and you hit one and the other starts vibrating? If there’s something about their story that feels true to you, you’ll feel it,” says Burnett.
Remember that prototyping is an iterative process. “You’re moving yourself to the next place, getting some data about that place, figuring out what your next options are, and moving to the next place, until eventually you solve it,” Burnett says. But even though getting to that solution can involve a significant amount of work, Burnett and Evans find that the prototyping process tends to give people an energetic boost, inspiring feelings of curiosity and engagement. It’s the exact opposite of feeling stuck.
Eliza Brooke is a freelance journalist covering design, culture, and entertainment.
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Three theories for a mysterious string of deaths in Putin’s Russia.
It’s a rough year to be a high-profile Russian: After nearly eight months of war in Ukraine, the Russian military is reeling and on its back foot; sanctions continue to squeeze the country’s economy and elite — and at least 15 Russian businessmen and executives have died in apparent accidents or by suicide, including a number of Putin allies.
The victims range from an executive with Gazprom, a major state-owned oil company, to the managing director of a state-run development corporation. The causes of death range from unremarkable — a stroke, for example — to lurid, such as death by toad poison in a shaman’s basement.
Combined, the sheer number of deaths, as well as the prominence of the dead and a long history of suspicious demises in Putin’s Russia, have raised questions about whether something other than ordinary bad luck is at fault.
According to Stanislav Markus, an associate professor at the University of South Carolina business school and author of Property, Predation, and Protection: Piranha Capitalism in Russia and Ukraine, it’s a near certainty. “We can almost certainly rule out the official explanation of the deaths as suicides or poor health,” Markus told me via email. He’s not alone; theories vary — and generally don’t feature some grand conspiracy by the Kremlin — but a number of Russia experts see “more than just randomness” in the deaths, as Syracuse University professor Brian Taylor, who specializes in Russian politics and is the author of The Code of Putinism, put it to me in an interview.
The string of mysterious fatalities began with the death of Gazprom Invest transport director Leonid Shulman in late January; a suicide note was reportedly found near his body, and the death was investigated as such.
Another Gazprom executive, Alexander Tyulakov, died in February, also by suicide, as did Ukraine-born billionaire Mikhail Watford, who was found dead in his house in the United Kingdom.
Vasily Melnikov, the founder of the medical supplies company MedStom, was found dead in March, in a possible murder-suicide along with his wife and his two children. Another alleged murder-suicide, that of former Gazprombank executive Vladislav Avayev and his wife and teenage daughter, followed in April, just one day before former oil and gas executive Sergei Protosenya was also found dead along with his family in a third possible murder-suicide incident.
Avayev and his family were shot to death, according to news reports, while Protosenya was found hanged and his wife and daughter fatally stabbed.
Other subsequent deaths, including multiple deadly falls — down stairs, from a window, from a moving boat — have also prompted speculation, though there is no overt evidence of foul play.
Most recently, Pavel Pchelnikov, a manager with the Russian Railways subsidiary Digital Logistics, died by suicide late last month; shortly before that, on September 21, a former Russian aviation expert, Anatoly Gerashchenko, fell to his death “from a great height” and down multiple flights of stairs, according to a report in the Daily Beast citing Russian media.
Of the dead, a number have links to Gazprom and Novatek, Russia’s two largest natural gas companies; two others were affiliated with Lukoil, also a major energy company in Russia.
There are reasons to doubt the official stories
In several cases, the family and friends of the dead have already raised questions about their deaths, or rejected official conclusions of suicide.
In a statement after Protosenya’s death, for example, Novatek, his former employer, said that speculations about his death “bear no relation to reality,” an apparent reference to early reports in Spanish media describing it as a murder-suicide. Protosenya’s son, Fedor, also told the Daily Mail that his father “could never do anything to harm them [his family]. I don’t know what happened that night but I know that my dad did not hurt them.”
Igor Volobuev, also a former Gazprombank executive, told CNN he does not believe Avayev’s death was truly a murder-suicide.
“He was in charge of very large amounts of money. So, did he kill himself? I don’t think so. I think he knew something and that he posed some sort of risk,” Volobuev said.
There’s something to these suspicions — political assassinations, after all, aren’t exactly unusual in Russia. Assassination by purported suicide is virtually a category to itself: As Ian Bremmer, president of the Eurasia Group, remarked on Twitter in September, “for those keeping track at home, 12 ‘threw himself from window/shot himself 7 times in the head’ russian oligarch deaths this year so far” (a number that has since increased).
for those keeping track at home, 12 “threw himself from window/shot himself 7 times in the head” russian oligarch deaths this year so far pic.twitter.com/3wPM4dbL2K
— ian bremmer (@ianbremmer) September 14, 2022