U.S. President Donald Trump said he persuaded Saudi Arabia to consider steps that would boost oil production, a move that could push the world's largest exporter to the limit and blow up a fragile OPEC truce. I have just talked to King Salman of Saudi Arabia and told him that Saudi Arabia wants to increase oil production because of the turbulence in Iran and Venezuela, maybe up to 2,000,000 barrels to make up for the difference … prices too high ! He agreed! "Said Trump on Twitter on Saturday.
The Saudi King Salman bin Abdulaziz and Trump discussed in a phone call on Saturday the efforts of oil-producing countries to offset potential bottlenecks in oil supply, the state's Saudi press agency reported. The two leaders emphasized the importance of maintaining the stability of the oil market, the report said the agency did not say the leaders agreed or referred to 2 million barrels.
The telephone exchange is another sign of how the American Saudi relations under Trump have improved nuclear dealings with Iran compared to the Obama administration that alienated the kingdom, Trump chose Saudi Arabia for his first trip abroad last year, and since then, the two governments have announced deals worth hundreds of billions of dollars Trump publicly praised how many US jobs the Saudis contribute brought the founding.
At a meeting of the Organization for Petroleum Exporting Countries in Vienna last weekend, Saudi Arabia ̵
Brent Crude, the global oil benchmark, passed the $ 80 a barrel mark on May 17, its highest level since November 2014. It closed at $ 79.44 on Friday.
If Saudi Arabia responds to Trump's request, it would push the world's free production capacity to the limit, which would mean that any supply disruption could have an excessive effect on oil prices. It would likely support other OPEC members, such as Iran and Venezuela, who initially tried to prevent an increase, along with Russia-led allies at their Vienna meetings.
"We will be in unknown territory", Amrita Sen, senior oil analyst at Energy Aspects Ltd. in London, said. "While Saudi Arabia theoretically has the capacity, it takes time and money to bring these barrels online, up to a year."
Saudi Arabia has a maximum capacity of 12.04 million barrels per day, according to the International Energy Agency. The kingdom pumped just over 10 million barrels a day in May, leaving just the gap of 2 million barrels a day that Trump demanded from the Saudi king.
Oil analysts and consultants nonetheless believe that the kingdom can produce more than 12 million barrels a day in an emergency through a so-called surge where oil fields are exploited, beyond what engineers think is a reasonable rate. In addition, Saudi Arabia is sharing a so-called Neutral Zone with Kuwait, which has not been used in recent years and can produce up to 500,000 barrels a day.
& # 39; Ramp Up & # 39;
Saudi Arabia can use some of its stock to boost exports, which is visible to the US president, while it takes time to increase production capacity, "said Olivier Jakob, head of the Swiss consulting firm Petromatrix GmbH.
OPEC met with a delicate agreement at a meeting in Vienna to satisfy some members, such as Iran and Venezuela, who wanted to limit production, and others, such as the Saudis, who wanted to free themselves from the supply cuts.
Venezuela is located in the midst of an economic crisis crisis that has led to a sharp decline in oil production, Trump's government in early May said it would renew US sanctions on Iran and try to reduce purchases of Iranian oil by other overseas buyers
If Saudi Arabia agrees with Trump's request, "that means he is calling on them to leave OPEC," Iran said OPEC governor Hossein Kazempour Ardebili. "There is no way a country could gain 2 million barrels a day over its production allocation if it does not expire from OPEC."
– With the support of Grant Smith and Abbas Al Lawati