Trump claims Saudi Arabia agreed to oil production hike, Riyadh doesn’t confirm

Jul 03, 2018, 12:29
Trump claims Saudi Arabia agreed to oil production hike, Riyadh doesn’t confirm

The momentum is still continuing, despite worries about the trade stand-off between the U.S. and its allies, which send global stocks and commodities tumbling down.

Saudi Arabia is the world's biggest oil exporter and has usually kept at least 1.5 million to two million barrels per day of spare capacity, according to the United States Energy Information Administration.

On Friday, at the Seventh International Seminar of the Organization of Petroleum Exporting Countries (OPEC) in Vienna, Austria, officials within one of the world's most influential cartels were discussing the global growth in demand for oil and its derivatives and what the experts believe are the prospects for a bright future for the industry given signs of robust global economic growth. The 13% surge in prices has been driven by a series of factors in the worldwide oil market that will trickle down to United States drivers filling up their gas tanks.

An issue that compels me to write to Your Excellency is that we have not arrived to any decision to assign any allocated production level of any member to others.

He did not specify if the figure was barrels per day (bpd), the normal measure for oil production.

At the same time, factional fighting in Libya is causing a large outage, while the oil output of Venezuela, once a major producer, has fallen by around 1 million barrels a day over the last two years, with further steep declines possible in the coming months. However, the group failed to announce a clear target for the same.

Saudi Arabia plans to pump up to 11 million bpd in July, and Russian Federation has said it could increase output by more than 200,000 bpd.

While the market was prepared for wide swing after the OPEC meeting, the outcome had initially limited the price impact. Reuters reported earlier this week that Iran has been infuriated by a recent increase by the Saudis to 10.7 million barrels a day, and blamed USA interference on the increase.

"There are companies and traders that are willing to give you a 60 day credit, crude is available in the market", the source said.

Brent crude futures LCOc1 were at $77.74 per barrel, down 11 cents, or 0.1 percent.

The price of crude has been on a wild ride over the past few months. The rupee touched a record high of Rs 69.09 versus dollar last week.

The market is not short of oil now. Rising geopolitical tensions is putting pressure on oil.

"OPEC decisions by no means warrant any action by some of its member countries in pursuit of the call for production increase by the USA, politically motivated against Iran and publicly declared".

The US Department of Energy softened the Trump administration's hard line on Thursday, saying sanctions on Iran may leave room for some buyers to cut back gradually.

If the U.S.is successful at convincing most countries to stop buying oil from Iran, the outages could rise to as high as 2 mb/d, although that remains speculation.

The threat of trade war between the U.S. and its allies may hit sentiment as well. It closed Friday at $79.44 a barrel.

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