Saudi Arabia Says It Will Increase Output To Keep Oil Market Stable

Marco Green
October 17, 2018

Iran has lost some customers for its oil because of looming US sanctions, but high prices are making up for the lost sales, Iranian Vice President Eshaq Jahangiri has said.

While most oil analysts have attributed the sharp rise of premium crude prices since April to over $80 a barrel at least in part to the loss of Iranian exports, the USA special envoy for Iran, Brian Hook, told reporters in Paris on October 15 that the market is doing fine with less Iranian oil.

USA crude price gains, however, were being limited by recent stock builds at Cushing, Oklahoma, the delivery point for WTI, where inventories have risen for three straight weeks, traders said.

He also assured of increased oil production in a month.

"The oil market is suffering from short supply and this can not be resolved by words".

The largest change is forecast in the Permian Basin of Texas and New Mexico, where output is expected to climb by 53,000 bpd to a new peak of 3.55 million bpd. But infrastructure has not kept pace with rising output, filling domestic tanks. The kingdom is a major buyer of American arms and is also a huge holder of US Treasury bonds which makes sanctions improbable.

API data are due at 4:30 p.m. EDT (2030 GMT) with the EIA at 10:30 a.m. EDT (1430 GMT) on Wednesday.

In a "fantastic" scenario where United States sanctions the Saudis, oil would skyrocket, hitting the global economy, including the U.S., said Ivan Kapustiansky, Leading Analyst at Forex Optimum.

Trump has urged the Organization of the Petroleum Exporting Countries to raise output to help cover a shortfall due to new USA sanctions on Iran.

In the first two weeks of October, Iran exported close to 1.5 million bpd of crude to countries including India, China and Turkey, some industry sources suggest.

Tensions have flared between the USA and Saudi Arabia over the disappearance of Jamal Khashoggi, a journalist with the Washington Post who was critical of the Middle East nation.

Saudi Arabia and UAE on Monday reiterated that the West Asian countries were looking to participate in India's petroleum downstream segment, including petrochemicals, refinery and retail.

US President Donald Trump can not bring oil prices down by "bullying" other nations, Iran's oil minister said on Tuesday, adding that the market was suffering from short supply.

Other reports by Click Lancashire

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