Trump asks Saudi Arabia to increase oil production

Zanganeh

Zanganeh

Saudia Arabia's leader has promised U.S. President Donald Trump that the country will produce more oil if needed and that it has 2 million barrels per day of spare capacity, the White House said on Saturday.

"Just spoke to King Salman of Saudi Arabia and explained to him that, because of the turmoil & disfunction in Iran and Venezuela, I am asking that Saudi Arabia increase oil production, maybe up to 2,000,000 barrels, to make up the difference".

His latest comments come a week after ministers from the Organization of the Petroleum Exporting Countries - of which Saudi Arabia is the major member - had already agreed to raise output from July.

"President Trump's reckless decision to pull out of the Iran deal has led to higher oil prices", Senate Minority Leader Charles Schumer, D-N.Y., said last month during a photo op outside an Exxon station.

The White House statement said instead that while King Salman bin Abdulaziz confirmed his country has the extra production capacity, the Saudis will "prudently" use it "if and when necessary to ensure market balance and stability, and in coordination with its producer partners, to respond to any eventuality". Any 2 million bpd-increase would thus be at least double market expectations.

"Saudi Arabia does not really like going beyond 11 million barrels a day and has no intention of expanding its current production capacity".

State Department officials said this week the United States is prepared to work with countries on a case-by-case basis to help them reduce imports of Iranian oil and suggested some exemptions were possible.

"We will be in uncharted territory".

Non-OPEC member Russian Federation on June 23 also backed the effort, capping a week of tense diplomacy for the grouping that averted a damaging rift between arch foes Iran and Saudi Arabia. Trump's claim of a 2-million-barrel increase for Saudi Arabia alone does not specify a timeframe.

Brent price on Friday rose $1.54 a barrel to $79.39 on concerns that United States sanctions against Iran would remove a substantial volume of crude from world markets at a time of rising global demand. Gasoline prices at the pump are also expected to rise as more Americans take to the roads in the middle of the peak summer driving season. "We maintain our Brent crude forecast of $70.80 per barrel for 2018 and $66 for 2019, following the OPEC meeting, though highlight some moderate upside risks for 2018", she said.

But OPEC's promises did not settle the markets, and crude oil futures have spiked since the meeting.

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

Since the lifting of sanctions in 2016, Iran has returned as a major oil supplier, selling around 2.5 million barrels a day, or more than 2 percent of global supplies.

Trump said in a tweet he had asked the king for such an increase and the king had agreed. "The re-imposition of sanctions on Iran may have been factored into the rapid increase in oil prices in recent months", Iradian added.

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