US President Donald Trump says Saudi Arabia’s King Salman has agreed to his request to increase oil production “maybe up to 2,000,000 barrels” to offset a decline in global supplies.
Trump tweeted on Saturday: “Just spoke to King Salman of Saudi Arabia and explained to him that, because of the turmoil & disfunction in Iran and Venezuela, I am asking that Saudi Arabia increase oil production, maybe up to 2,000,000 barrels, to make up the difference … Prices to high! He has agreed!”
During the call, the Saudi king and Trump emphasised the need to preserve oil market stability and efforts of oil-producing countries to compensate for any potential shortage, Saudi state media reported on Saturday.
Just spoke to King Salman of Saudi Arabia and explained to him that, because of the turmoil & disfunction in Iran and Venezuela, I am asking that Saudi Arabia increase oil production, maybe up to 2,000,000 barrels, to make up the difference…Prices to high! He has agreed!
— Donald J. Trump (@realDonaldTrump) June 30, 2018
Saudi Arabia has a maximum sustainable capacity of 12 million barrels per day, but the world’s top oil exporter and Organisation of Petroleum Exporting Countries biggest producer has never tested that high level of production.
Last week, OPEC led by Saudi Arabia and its allies including Russia, agreed to boost oil supplies after curbing output since 2017 to address a global supply glut and push prices back up.
Benchmark Brent crude was around $US79 a barrel on Friday and prices look to remain strong for the rest of this year as a result of supply disruptions in countries including Libya and Venezuela.
Riyadh plans to boost output to 11 million bpd, the highest in its history, in July, up from 10.8 million bpd in June, a source familiar with Saudi output plans told Reuters this week.
“We will be in uncharted territory,” said oil market analyst Amrita Sen of consultancy Energy Aspects.
“While Saudi Arabia has the capacity in theory, it takes time and money to bring these barrels online, up to one year.”
Saudi Energy Minister Khalid al-Falih met US Secretary of State Mike Pompeo in Washington on Thursday to discuss energy security.
The Trump administration is pushing countries to cut all imports of Iranian oil from November, when the US re-imposes sanctions against Tehran.
Trump earlier this year withdrew from a 2015 nuclear deal agreed between Iran and six major powers, calling it a “defective” agreement.
US officials are pressing allies in Europe, Asia and the Middle East to adhere to the sanctions, which are aimed at pressuring Iran to negotiate a follow-up agreement to halt its nuclear programs.