Friday, 22 February, 2019

Algeria warns Saudi Arabia, Russia against increasing oil output

Crude Oil Crude Oil
Nellie Chapman | 05 July, 2018, 16:11

Saudi Arabia and Russian Federation, which led OPEC and partner countries in reaching last month's production deal, reaffirmed the agreement in statements on Tuesday, saying this will mean increasing oil output by 1 million barrels a day.

Outside North America, looming USA sanctions against major oil exporter Iran were the focus of attention.

The leader of Saudi Arabia promised US President Donald Trump that he can raise oil production if needed and the country has 2 million barrels per day of spare capacity, the White House said on Saturday.

On Wednesday, Trump tweeted that OPEC must "REDUCE PRICING NOW!"

On Monday, Trump took another swipe at OPEC, accusing the oil organization of not helping the USA to reduce domestic gasoline prices. "Supply side disruptions that are bullish for oil, and demand side forces including the threat of trade protectionism that threaten the global economy and would thus be bearish for oil prices and most other commodities".

Traders have also been watching U.S. oil production, which has surged by 30 percent over the last two years to 10.9 million bpd, absorbing some of the recent disruptions.

Despite Monday's drop in oil prices, many analysts see oil prices likely to resume their upward climb, given a range of geopolitical factors.

The agreement from Saudi Arabia is surprising as in recent months they have agreed with Russian Federation and other OPEC+ members to keep production relatively low.

Opec (Organisation of Petroleum Exporting Countries) has recently agreed to increase oil supplies.

This is while world oil prices have climbed higher as the Trump administration has pressured USA allies to end all purchases of oil from Iran.

The Trump administration has been counting on Saudi Arabia and other OPEC members to supply enough oil to offset the lost Iranian exports and prevent oil prices from rising sharply.

Outside North America, looming United States sanctions against major oil exporter Iran were the focus of attention.

Oil briefly touched $75 a barrell on Tuesday before retreating following the news of the Saudi government decision. Bringing all those barrels to market could take up to a year, and render OPEC agreements irrelevant.

Ardebili also claimed that Trump's words are "discrediting" OPEC.

Despite the relief from Saudi Arabia and Russian Federation, oil markets remain tense because of unplanned outages from Canada to Venezuela and Libya. He also called on the United States to join world powers in a meeting with Iran in Vienna on Friday. That's knocked about 850,000 barrels a day out of the global oil market.

"We want to defeat America's efforts ... to stop Iran's oil exports", he said. "Iran. OK. You think of it. Iran is their big enemy, so they are going to have to do it", Trump said on Sunday in a Fox News interview.