After the OPEC cut, Biden warns Saudi Arabia of "consequences," but he has few options.

At a hotel in Jeddah, Saudi Arabia's Red Sea coastal city, US President Joe Biden and Saudi Crown Prince Mohammed bin Salman arrive for the family portrait at the Jeddah Security and Development Summit (GCC+3).

President Joe Biden has been open about his anger with Saudi Arabia for its choice to reduce oil production in concert with its OPEC allies, which is against American intentions.

Washington views the kingdom's move, which it did in conjunction with Russia and other oil-producing governments, as a snub and an obvious indication that it is siding with Moscow at a time when the world economy is precariously balanced and energy prices are high.

Early in October, the oil producer group announced its largest supply cut since 2020, amounting to 2 million barrels per day starting in November. According to its members, the goal is to encourage a recovery in crude prices to fend off a potential decline in demand.

In an interview with CNN on Tuesday, Biden stated that there would be "consequences" for this. He omitted to elaborate on what those repercussions would be.

But what options does the Biden administration have, and how likely are they to fail?

Both antitrust laws and weapons are prohibited.

Generally speaking, the energy for security tenet served as the foundation for the Saudi-American partnership. Since the 1940s, Washington has given Saudi Arabia billions of dollars in military and security assistance. However, Riyadh feels that the U.S. commitment to its security has diminished in recent years, particularly after the Obama administration started making diplomatic breakthroughs with Iran.

Michael Stephens, an associate fellow at the Royal United Services Institute in London, told CNBC that "the truth is, neither party has been holding up their end of the bargain for about 10 years now."

"And what you're witnessing, I think, are irreversible fissures in the relationship," Stephens said, adding that Saudi Arabia's OPEC oil output cut "is a reflection of that." Neither side "truly sees as much strategic benefit in the other as they did 20 years ago."

In terms of "consequences," Washington can stop providing military assistance to Saudi Arabia and pursue legal action against OPEC.

An image from a file showing canisters with Patriot missiles within them to deflect missiles aimed at Saudi Arabia or its neighbors.

In fact, Sen. Bob Menendez, D-N.J., chairman of the Senate Foreign Relations Committee, asked that the United States immediately suspend all collaboration with Saudi Arabia, including arms shipments, just one day before Biden's remarks.

Menendez issued a statement in which he demanded that "the United States immediately freeze all areas of our engagement with Saudi Arabia, including any arms sales and security cooperation beyond what is absolutely essential to preserve U.S. personnel and interests."

Sen. Chris Murphy, D-Conn., questioned in a previous interview with CNBC, "What's the point of looking the other way when the Saudis cut up journalists and limit political expression inside Saudi Arabia if, when it counts, the Saudis actually choose the Russians over the U.S."

Even Vermont senator Bernie Sanders stepped in, pleading in a tweet, "Saudi Arabia, one of the worst human rights violators in the world, can persuade Putin to support its monarchy if it wishes to work with Russia to raise US gas prices. We must remove all US soldiers from Saudi Arabia, cease providing them with arms, and dismantle the country's price-fixing oil cartel. "

There are legal avenues the U.S. government can explore in addition to withholding military aid.

The No Oil Producing and Exporting Cartels (NOPEC) bill is one example. As a result, OPEC would be labeled a cartel and its participants would be liable for antitrust laws.

The plan, which lawmakers have long considered, aims to shield American consumers and businesses from fictitious oil price increases.

Although it has not yet been signed into law and passed by a Senate committee in early May, it may subject OPEC members and allies to legal action for orchestrating production curbs that increased petroleum prices globally.

To become law, the measure would still need to be approved by the full Senate and House and signed by the president. The NOPEC bill has previously drawn criticism from OPEC officials, who warned that it would further destabilize the energy markets.

Effects on the United States and crude prices

The decision by OPEC+, which consists of OPEC and its allies who are not members of OPEC, to reduce output Torbjorn Soltvedt, lead MENA analyst at risk intelligence company Verisk Maplecroft, claimed that the incident "underscores the extent to which the Biden administration has lost its power to influence Saudi OPEC+ policy."

Despite Biden's threat of "consequences" after the cut, he claimed that "the White House has few positive options," pointing to the threats of antitrust legislation and the withdrawal of American military assets from Saudi Arabia by U.S. lawmakers.

Both options would send a clear statement, but this would backfire on the United States and hurt crude prices.

According to Soltvedt, "Both of these possibilities would pose a threat to sour already tense relations, adding more upward pressure on oil and fuel costs."

In essence, he said, a collapse in ties between the United States and Saudi Arabia would result in greater Middle East risk premiums on the world oil market as well as higher oil and fuel costs. In advance of the November midterm elections, this is the exact opposite of what the White House wants to do.

The important thing to keep in mind is that the 2 million barrel per day reduction will not actually be as large as the headline figure suggests; for example, Iraq has said it will produce more than its designated quota because several member states have already fallen far short of their individual production caps.

Even still, a lot of American lawmakers have become impatient with the Saudi-American alliance, particularly as the United States' purchases of Saudi oil have decreased over time and as Asia now receives more than 80% of the Middle East's crude exports.

According to Soltvedt, this has caused an increase in the number of American senators to wonder "why the American navy should underwrite the security of Middle Eastern oil exports when those barrels are increasingly moving east instead of west."