Saudi king agrees to ramp up oil production, Trump says

Saudi king agrees to ramp up oil production, Trump says

Saudi king agrees to ramp up oil production, Trump says

Saudi Arabia could divert extra barrels into storage.

"This scheduling change was prompted by reasons entirely unrelated to the bilateral relationship", the USA embassy in New Delhi said in a statement on Thursday.

Iranian OPEC governor Hossein Kazempour Ardebili told Bloomberg that Trump's request amounts to "calling on [Saudi Arabia] to walk out from OPEC". Saudi Arabia was producing around 10 million barrels of crude a day in May, according to OPEC. That was after Saudi Energy Minister Khalid al-Falih said the kingdom would honor the OPEC decision to stick to a 1-million-barrel increase.

Brent crude, the global benchmark, was selling Friday for over $79 a barrel, and there is talk that in certain circumstances a return to $100 a barrel oil is possible. It closed Friday at $79.44 a barrel.

As the summer driving season moves into high gear, retail gasoline prices have been as high as $2.96 a gallon, according to the Energy Information Administration.

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.

The Trump administration has been pushing Saudi Arabia and other OPEC members to increase production to offset lost Iranian exports and prevent a price hike.

OPEC decisions by no means warrant any action by some of its Member Countries in pursuit of the call for production increase by USA, politically motivated against Iran and publically declared.

"Once you get above that level, we are into uncharted territory", said David Fyfe, chief economist at the Gunvor Group, a major trading house. "While Saudi Arabia has the capacity in theory, it takes time and money to bring these barrels online, up to one year", said Amrita Sen of consultancy Energy Aspects. Russian Federation plans to increase output by more than 200,000 bpd.

The increase, if it can be pulled off, would be an incredibly rapid ramp up in output, up more than 1 million barrels per day (mb/d) from May levels.

Saudi Arabia is to pump almost 11 million bpd, and perhaps more.

Bringing down imports to zero, as desired by the USA, may however not be feasible, officials said.

"Prices too high! He has agreed!" In January, OPEC producers agreed to reduce output to help balance the market after a glut of supply caused a steep fall in prices.

Global oil markets remain tight with unplanned supply stoppages from Libya, Venezuela and more recently, an outage at Canada's Syncrude upgrader that has especially strained North American markets.

Meanwhile there has been growing civil unrest in Venezuela amid an ongoing economic crisis.

But a trade dispute between the United States and China is expected to slow the flow of crude oil from the Asia, one of the sources said. Reposition of sanctions on Iran is likely to affect top Asian buyers like Japan, South Korea and India.

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