Saudi says ready to pump more oil to balance market

04 July, 2018, 17:38 | Author: Lora Ball
  • A group of protesters chant slogans at the main gate of old Grand Bazaar in Tehran Iran

US President Donald Trump tweeted on Saturday that Saudi Arabia's King Salman bin Abdulaziz Al Saud had agreed to pump more oil, "maybe up to 2,000,000 barrels".

To make up for potential shortfalls in supply from Iran sanctions as well as other disruptions including Libya and Venezuela, the Organization of the Petroleum Exporting Countries (OPEC) has agreed with Russian Federation and other oil-producing non-OPEC members to raise output from July. They also stressed on the importance of providing supplies when necessary to "achieve common interests and stimulate the global economic growth".

Oil prices fell on Monday as supplies from Saudi Arabia and Russian Federation rose while economic growth stumbled in Asia amid an escalating trade dispute with the United States.

Saudi Arabia's spare production capacity is estimated to be around 2 million barrels per day.

In late 2016, OPEC members and 11 non-OPEC countries struck a deal to reduce oil output by 1.8 million barrels per day compared to October 2016.

The Trump administration is pushing countries to cut all imports of Iranian oil from November when the United States re-imposes sanctions against Tehran, after Trump withdrew from the 2015 nuclear deal agreed between Iran and six major powers, against the advice of allies in Europe and elsewhere.

"There is little confidence in the market that we're going to escape an ever-tightening supply and demand balance now".

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The U.S. government plans to shut Iran's oil exports out of the market from November, demanding that all countries stop buying its oil.

USA production has soared 30 per cent in the past two years, to 10.9 million bpd, meaning the world's three biggest oil producers now churn out nearly 11 million bpd each, meeting a third of global oil demand.

Saudi Arabia, which has been pumping around 10 million barrels per day, holds the largest spare capacity in the world and is the only country that can add substantial supply to the market.

"OPEC will, from July 1, strive to adhere to the overall conformity levels for the remaining duration of the Declaration of Cooperation", he said in a statement cited by the news agency.

The cabinet praised the Kingdom and the UAE's adoption of a joint strategy for integration between the two countries economically, developmentally and militarily through 44 projects called "Resolve Strategy".

Futures closed just 0.3 per cent higher after surging past US$75 a barrel earlier in the session.

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