Trump asks Saudi Arabia to increase oil production

Trump asks Saudi Arabia to increase oil production | TheHill

US President Donald Trump says Saudi Arabia has agreed to his request for an increase in its oil production.

The tension began rising when Trump withdrew the USA from the nuclear deal between Iran and six other world powers last May.

Oil prices have edged higher as the Trump administration pushes US allies to end oil purchases from Iran.

Saudi Arabia acknowledged in a statement published Saturday on the state-run Saudi Press Agency that King Salman had received a telephone call from Trump and that the two discussed the need to make efforts to "maintain the stability of oil markets".

According to Monica Malik, chief economist at Abu Dhabi Commercial Bank, Opec members' statements indicated a move to a group-wide ceiling, rather than the individual country allocation, hence allowing members with spare capacities to increase production to compensate for lower or falling output from other countries. However, the price action on Friday suggests that buyers are still coming in and aggressively willing to chase this market higher.

Officials didn't immediately respond to a request for comment.

The current production curb pact calls for participating countries to trim output by 1.8 million barrels a day.

Crude oil's gains have been buoyed by a dispute in Libya over oil-marketing rights that is restricting the country's export capacity. "He has agreed! (sic)", Trump tweeted.

When news broke, the OPEC governor of Iran Hossein Kazimpour Ardebili said that increasing oil production so drastically above the quota assigned by OPEC is tantamount to leaving the organization altogether.

Oil demand has been chasing records for most of the year, and OPEC has said it will raise output in order to meet demand and replace crude from unplanned disruptions.

The Trump administration is pushing countries to cut all imports of Iranian oil from November when the United States re-imposes sanctions against Tehran, after Trump withdrew from the 2015 nuclear deal agreed between Iran and six major powers, calling it a "defective" agreement. Trump's tweet offered no timeframe for the additional 2 million barrels - whether that meant per day or per month.

"Prime Minister Abe will probably try to accommodate President Trump as much as possible on the trade imbalance and buying crude oil is a no-brainer as long as the economics work", from Tony Nunan, senior oil risk manager at Mitsubishi Corp in Tokyo.

"OPEC decisions by no means warrant any action by some of its member countries in pursuit of the call for production increase by the USA, politically motivated against Iran and publicly declared". Total's chief executive Patrick Pouyanne said last month that it was unthinkable for any global company to risk being excluded from the United States financial system - the penalty for buying Iranian crude beyond November 4.

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