Riyadh doesn’t “like” raising oil output, Saudi official says
Story Code : 734813
The anonymous official made the comment to The Wall Street Journal Saturday, not long after US President Donald Trump claimed that the monarchy has agreed to raising the oil output to take on Iran and Venezuela.
"Saudi Arabia does not really like going beyond 11 million barrels a day and has no intention of expanding its current production capacity. It is expensive," the Saudi official told the paper.
Trump claimed in a tweet that Saudi King Salman bin Abdulaziz al-Saud had agreed to his call to boost production by "maybe up to 2,000,000 barrels."
"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...Prices to high! He has agreed!" read the tweet.
Saudi Arabia acknowledged in a statement published Saturday on the state-run Saudi Press Agency that King Salman had received a telephone call from Trump and that the two discussed the need to make efforts to "maintain the stability of oil markets."
“During the call, the two leaders stressed the need to make efforts to maintain the stability of oil markets and the growth of the global economy,” said the statement as quoted in the report.
According to the report, the two leaders also spoke about efforts of oil producing countries to compensate for any potential shortage of supply.
There was no confirmation, however, that the Saudi regime would boost its oil production, as claimed in Trump’s tweet.
The development came days after the oil-rich Persian Gulf state, which is the world's largest oil exporter, agreed to substantially raise production. The leading OPEC member announced plans to pump a record-high 11 million barrels of oil per day in July, according to press reports.
Saudi Arabia currently produces about 10 million barrels of oil per day. Trump’s tweet, however, mentioned no time frame for the additional 2 million barrels – whether it meant per day or per month.
However, investors are betting that Saudi regime “has little room to respond to a future crisis should it boost output even more to meet Trump's request, as Saudi Arabia only has about 2 million barrels of unused capacity,” according to International Energy Agency.
Meanwhile, UK-based energy consultancy group, Fact Global Energy (FGE), reported in its June newsletter that Washington is determined to "push Iran's exports to zero."
“Added to the losses from Venezuela, is there enough capacity to replace the lost Iranian volume??” it asked, insisting that “it is highly doubtful."
"This will push the system close to the limit," FGE further, emphasized, noting that spare production capacity could fall below 2 million barrels a day -- a level previously associated with $100 per barrel prices.
This is while world oil prices have climbed higher as the Trump administration has pressured US allies to end all purchases of oil from Iran. Prices have also increased due to the persisting US-backed troubles in Venezuela, as well as with the unrest in Libya over control of that country’s oil infrastructure.
The administration has threatened key allies such as South Korea with sanctions if they do not cut off Iranian imports by early November. South Korea accounted for 14 percent of Iran’s oil exports last year, according to the US energy department. China remains the largest importer of Iranian oil with 24 percent, followed by India with 18 percent. Turkey stood at 9 percent and Italy at 7 percent.
The US state department has claimed that it expects the “vast majority” of world nations will comply with Washington’s demand to boycott Iran’s oil.
Meanwhile, Leader of Iran’s Islamic Revolution Ayatollah Seyyed Ali Khamenei slammed all-out US economic and political measures against Tehran in a Saturday address, describing them as futile efforts to turn Iranians against the Islamic Republic.
"The purpose of the current economic pressures is to make people fed up, but with divine power, we will increase our bond with the people day by day, and by preserving our coherence, we will strengthen the faithful, motivated and proactive youth," he said.