Trump asks Saudis to up oil output to lower prices

02 July, 2018, 05:13 | Author: Regina Lloyd
  • Crude Oil

Russian Federation could also add as much as 400,000 barrels a day, analysts say.

In briefings since then, OPEC officials have signaled the extra volume is likely to be in the range of 700,000 to 1 million bpd. Its record is 10.72 million barrels in a day.

At the OPEC meeting last week, Iran's oil minister said that the cartel should not be influenced by Trump and should deal with supply and demand.

A further 2 million barrel per day increase would put Saudi Arabia's oil output almost at its maximum of 12 million barrels per day, as measured by the International Energy Agency. Saudi oil officials did not comment.

Saudi Arabia now produces some 10 million barrels of crude oil a day.

Trump's aim may be to exert maximum pressure on Iran while at the same time not upsetting potential U.S. midterm voters with higher gas prices, said Antoine Halff, a Columbia University researcher and former chief oil analyst for the International Energy Agency.

Saudi Arabia's pledge followed a meeting earlier this month in Vienna of OPEC members, Russian Federation and other oil producing countries.

However, it is unclear how seriously to take Trump's claim of success.

"Once you get above that level, we are into uncharted territory", said David Fyfe, chief economist at the Gunvor Group, a major trading house. "While Saudi Arabia has the capacity in theory, it takes time and money to bring these barrels online, up to one year", said Amrita Sen of consultancy Energy Aspects.




Trump in May withdrew the United States from a 2015 agreement that curbed Tehran's nuclear capabilities and ordered the reimposition of USA sanctions against Tehran.

With this move, the Trump administration has increased pressure on allies to stop funding to Iran.

Besides the looming US sanctions against Iran, which is fueling the rally in Brent futures, and the outage in Canada, which is supporting WTI crude, both markets are also benefitting from supply issues in Venezuela and Libya.

Meanwhile, Iran's Supreme Leader Ayatollah Ali Khamenei on Saturday accused the USA of trying to turn Iranians against their government.

"They bring to bear economic pressure to separate the nation from the system. but six United States presidents before him tried this and had to give up", Khamenei was quoted as saying on Saturday by his website Khamenei.ir, referring to Trump.

"Putting aside the fact that Saudi Arabia has no such capacity to bolster its crude output, this demand [by Trump] could be inferred as an order for the kingdom to walk out of OPEC", Iran's OPEC governor, Hossein Kazempour Ardebili was quoted as saying by the Iranian Oil Ministry website SHANA on Saturday. Trump added in reference to the Saudi king.

A source familiar with Saudi Arabia's production plans told Reuters earlier in the week of the kingdom's intention to increase output by 200,000 bpd this month. "This was managed between the two to rob the pocket of rest of the world", he said.

At a meeting of the Organization of Petroleum Exporting Countries in Vienna, Saudi Arabia-the group's largest producer-joined other members in agreeing to scale back its over-compliance with output cuts that have been in place since the beginning of 2017. Venezuela's production has fallen to 1.4 million barrels a day, about a million barrels a day less than it produced two years ago.

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