2018 budget in danger as Saudi Arabia pump 2m more barrels

05 July, 2018, 14:28 | Author: Brooke Harris
  • Anyone trying to take away Iran's oil market would be committing great treachery against Iran and will one day pay for it' Iranian Vice President Eshagh Jahangiri said on Sunday

The fall came as the Russian Energy Ministry said on Monday that the country's oil output increased to 11.06 million barrels per day in June from 10.97 million barrels per day in May.

Oil prices had risen on Friday on worries that USA sanctions against Iran would take away significant volumes of crude oil from world markets while oil demand worldwide increases. There were apprehensions that any disruption or short supply could affect the world economic growth with serious consequences for developing countries.

Saudi Arabia has said it is ready to use its spare production capacity in order to help balance the global oil market, according to a Cabinet statement released on Tuesday.

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

Buyers of Iranian crude oil have been hoping for relief from US sanctions in order to have more time to reduce purchases. India, South Korea and Turkey - all allies or friends of the United States - are major importers of oil from Iran and are unlikely to be able to switch suppliers entirely by November.

The clash over OPEC policy and the resumption of USA sanctions on Iran has been amplified this week as Trump continues to target the group which he blames for rising prices.

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Over the weekend, President Donald Trump tweeted that Saudi Arabia agreed to increase crude oil production by 2 million barrels per day (Mbd) to cool high oil prices and make up for supply shortfalls due to current outages in Venezuela and future supply losses in Iran.

He said, "The US [officials'] statement in this regard is unilateralism...and a breach of all global rules and regulations in energy and trade sectors".

Both leaders also discussed "efforts by the oil-producing countries to compensate for any potential shortage in supplies", SPA reported. It is still too early to answer this question.The United States has used its Arab allies, especially Saudi Arabia, to offset oil imports from Iran, and the Saudi minister of economics, Khalid al-Fatih, announced his country's readiness in this regard, especially with its oil export power.

Trump threatened in an interview that aired on Sunday to put sanctions on European companies that do business with Iran.

It seems to be an agreement that Saudi Arabia would control the flow of crude to maintain the price at the current level or a bit lower around $70 per barrel area.

He was not specific on whether the additional two million barrels was a per-day figure - but worldwide daily demand is nearing 100 million bpd. Along with OPEC+ curbing output by 1.8 Mbd, Venezuela's crude oil production continues to decline and could soon drop under 1 Mbd, depriving the market-and specifically USA refiners-of a major oil supplier.

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