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Trump says Saudi king agrees to ramp up oil production
WASHINGTON, July 1, 2018 (BSS/AFP) – US President Donald Trump said on
Saturday that Saudi Arabia’s King Salman had agreed to his request to ramp up
oil production, a week after OPEC already announced an output rise.
The official Saudi Press Agency confirmed a phone call between the two
leaders about oil, but mentioned no specifics.
“Just spoke to King Salman of Saudi Arabia and explained to him that,
because of the turmoil & dysfunction in Iran and Venezuela, I am asking that
Saudi Arabia increase oil production, maybe up to 2,000,000 barrels, to make
up the difference,” Trump announced in an early morning tweet.
“Prices too high! He has agreed!”
Later, the White House released a more cautious statement saying “the two
leaders reaffirmed their dedication to a healthy and stable global energy
market for the benefit of all nations.”
“The two leaders agreed that balancing the global oil market is essential
to ensure access to reliable and affordable energy to people everywhere,” it
said.
“In response to the president’s assessment of a deficit in the oil market,
King Salman affirmed that the kingdom maintains a two million barrel per day
spare capacity, which it will prudently use if and when necessary to ensure
market balance and stability, and in coordination with its producer partners,
to respond to any eventuality.”
The Saudi Press Agency said Trump had called Salman and the two highlighted
“the necessity of doing efforts in order to preserve the stability of the oil
market and the global economy growth.”
They also discussed “efforts of the producing countries to cover any
possible shortage in supplies,” the agency said in its brief report.
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.
– ‘Simply not doable’ –
But oil officials cited by The Wall Street Journal said it is debatable
whether the kingdom would be able to raise output by the amount Trump
suggested.
“This is just simply not doable,” said one senior Saudi oil official cited
by the Journal.
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Trump has repeatedly lashed out at OPEC on Twitter in recent months, piling
pressure on Riyadh, a major ally, to boost output as he hopes for lower pump
prices before midterm congressional elections in November.
His latest comments come a week after ministers from the Organization of
the Petroleum Exporting Countries — of which Saudi Arabia is the major
member — agreed to raise output from July.
Non-OPEC member Russia on June 23 also backed the effort, capping a week of
tense diplomacy for the grouping that averted a damaging rift between arch
foes Iran and Saudi Arabia.
The ministers announced they would ramp up oil production by around one
million barrels a day from July.
“I think it will contribute significantly to meet the extra demand that we
see coming in the second half,” Saudi Energy Minister Khalid al-Faleh told
reporters at the time.
– A face-saving deal –
The talks centered on whether to amend an 18-month-old supply-cut deal
between OPEC members and allied countries, including Russia, that has cleared
a global oil glut and lifted crude prices.
The unprecedented supply-cut pact has lifted crude prices from below $30 a
barrel in early 2016 to around $70.
Saudi Arabia, backed by non-member Russia, had argued strongly in favor of
increasing production as grumbles in major consumer countries like the United
States, India and China have grown about higher prices.
Iran opposed any changes to the original production-cut deal at a time when
its oil industry is facing renewed sanctions over Trump’s decision to quit
the international nuclear deal with Tehran.
In the end, both sides were able to save face.
The current production curb pact calls for participating countries to trim
output by 1.8 million barrels a day.
But production constraints and geopolitical factors have seen several
nations exceed their restriction quotas, keeping about 2.8 million barrels
off the market, according to OPEC.
By agreeing to collectively raise output by a million barrels, member
countries are simply committing to comply fully with the deal struck in late
2016.
Iran has accused Trump of trying to politicize OPEC and said it was US
sanctions on Iran and Venezuela that helped push up prices.
Saudi Arabia was producing around 10 million barrels of crude a day in May,
according to OPEC.
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