Published: Tue, October 23, 2018
Markets | By Otis Pena

Saudi Energy Minister: Cant cover Iran's oil production

Saudi Energy Minister: Cant cover Iran's oil production

Oil prices fell almost 3 percent to more than one-month lows on Tuesday after Saudi Arabia said it could supply more crude quickly if needed, easing concerns ahead of USA sanctions on Iran and as us equity markets sold off.

"There is no intention", Saudi Arabia's Minister of Energy Khalid al-Falih told TASS news agency when asked whether the kingdom could impose the 1973-style oil embargo.

Brent crude oil prices rose back above $80 a barrel on Monday as markets were expected to tighten once U.S. sanctions against Iran's crude exports are implemented next month.

USA sanctions on Iranian oil begin on November 4 and Washington has said it wants to stop all of Tehran's fuel exports, but other oil producers are pumping more to fill any supply gaps.

Falih said Saudi Arabia would soon raise output to 11 million barrels per day (bpd) from the current 10.7 million.

"The request that America made to Saudi Arabia and other OPEC countries is to be sure that if there is any loss of supply from Iran, that we will supply that".

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The selling is being fueled by a drop in Asian equity markets and by a pledge by Saudi Arabia to play a "responsible role" in stabilizing the energy markets as we rapidly approach the start of the sanctions against Iran.

The United States can not stop Iranian oil exports by imposing sanctions on Tehran, Iran's oil minister said on Tuesday, warning that such restrictions will ensure the market remains volatile.

OPEC agreed in June to boost supply to make up for the expected disruption to Iranian exports.

West Texas Intermediate for December delivery fell as much as $1.43 to $67.93 a barrel on the New York Mercantile Exchange, and traded at $68.18 as of 8:41 a.m. local time.

An internal document reviewed by Reuters suggested OPEC is struggling to add barrels as an increase in Saudi supply was offset by declines elsewhere, including Iran and Venezuela. Higher prices for oil is a tax on the middle/lower class in the US. Shipping brokerage Eastport said crude prices were "expected to decline in coming months, as rising production in the USA offsets increasing global demand".

J.P. Morgan said it raised its 2019 Brent price forecast by a whopping $20.50 per barrel to $83.50 saying this "bullish argument is strongly driven by tighter supply due to Iranian sanctions and declining spare capacity".

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