Published: Thu, July 05, 2018
Markets | By Otis Pena

Trump Claims Saudi Arabia Will Boost Oil Production

Trump Claims Saudi Arabia Will Boost Oil Production

After cabinet meeting on Tuesday, the official Saudi Press Agency (SPA) quoted a statement of the leadership that the Kingdom is prepared to utilise its spare production capacity when necessary to deal with any future changes in the levels of supply and demand. "If supply doesn't rise, we expect Brent prices to touch $85 by year end as markets will be in a deficit", Valecha said.

President Donald Trump's administration has threatened close allies such as South Korea with sanctions if they don't cut off Iranian imports by early November. There were apprehensions that any disruption or short supply could affect the world economic growth with serious consequences for developing countries.

The move coincides with United States plans to reimpose economic sanctions on OPEC member Iran, including halting oil exports.

Turkey has also said it would keep up Iranian crude imports, while China, the largest consumer of Iranian crude oil, has criticised the USA for withdrawing from the deal.

There have been reports all over the financial media that president Trump is demanding that Saudi Arabia increase production by 2 million barrels per day. "The Iranian government has a plan".

Yet President Donald Trump's social media posts on Saturday helped unsettle the market when he tweeted that Saudi Arabia had agreed to pump more oil, "maybe up to 2,000,000 barrels", the tweet read, presumably meaning barrels a day. It's a game that started back in the 1970s when the Kingdom succeeded America as the world's largest oil producer.

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

"Iran now produce 2.8 million barrels per day, with China purchasing 600,000 and India 400,000, equivalent to half of Iran's oil exports, while the rest are exported to Turkey, Japan, South Korea, France, Italy, and Spain".

He explained that it was hard to anticipate how the market would integrate with a possible increase in crude oil output from major producers, referring to Saudi Arabia and Russian Federation.

An agency report on Tuesday indicated, however, that despite the USA push on Saudi Arabia, futures in NY jumped as much as 1.7 per cent.

At the same time, Iranian Oil Minister Bijhan Zanganeh reminded Riyadh that "any increase in the production by any member country beyond commitments stipulated in OPEC's decisions. would constitute a breach of the agreement".

"Saudi Arabia obviously can deliver as much as the market would need, but we're going to be respectful of the 1-million-barrel cap - and at the same time be respectful of allocating some of that to countries that deliver it", al-Falih said then.

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