Trump: Saudis will boost production to offset sanctioned Iranian oil

Trump said he received an assurance from King Salman that Saudi Arabia will increase oil production to “make up the difference” in lost Iranian oil. 

By: AP

US President Donald Trump said Saturday that he received an assurance from Saudi Arabia’s King Salman that his country would increase oil production by “maybe up to 2,000,000 barrels” in response to sanctions against Iran.

Saudi Arabia acknowledged the call took place, but mentioned no production targets.

Trump wrote on Twitter that he had asked the king in a phone call to boost oil production “to make up the difference…Prices to (sic) high! He has agreed!”

A little over an hour later, the state-run Saudi Press Agency reported on the call, but offered few details.

“During the call, the two leaders stressed the need to make efforts to maintain the stability of oil markets and the growth of the global economy,” the statement said.

It added that there also was an understanding that oil-producing countries would need “to compensate for any potential shortage of supplies.” It did not elaborate.

In a statement issued Saturday night, the White House did not specify that Saudi Arabia would increase production but said that “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.”

Oil prices have edged higher as the Trump administration has pushed allies to end all purchases of oil from Iran following the US pulling out of the nuclear deal between Tehran and world powers. Prices also have risen with ongoing unrest in Venezuela and fighting in Libya over control of that country’s oil infrastructure.

Last week, members of the Organization of the Petroleum Exporting Countries cartel led by Saudi Arabia and non-cartel members agreed to pump 1 million barrels more crude oil per day, a move that should help contain the recent rise in global energy prices.

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.

Trump’s aim may be to exert maximum pressure on Iran while at the same time not upsetting potential US midterm voters with higher gas prices, said Antoine Halff, a Columbia University researcher and former chief oil analyst for the International Energy Agency.

China is the largest importer of Iranian oil with 24 percent, followed by India with 18 percent. Turkey stood at 9 percent and Italy at 7 percent.

However, India recently announced it would stop buying Iranian oil in deference to the Trump administration’s call for renewed sanctions.

The administration has threatened close allies such as South Korea with sanctions if they don’t cut off Iranian imports by early November. South Korea accounted for 14 percent of Iran’s oil exports last year, according to the US Energy Department.