Oil falls as Saudi, Russian output rises

Gladys Abbott
July 2, 2018

OPEC and non-OPEC countries said they would raise supply by returning to 100 percent compliance with previously agreed output cuts, after months of underproduction.

"The [Iranian] government has a plan. and God willing we are certain that we will be able to sell as much oil as we want", Jahangiri said. Earlier this year, to the chagrin of European partners, Trump said he would pull the United States out of the Iran nuclear agreement secured by world powers.

President Donald Trump lashed out at OPEC with a warning to stop manipulating oil markets and piled pressure on close United States allies in an interview that aired on Sunday with a threat to sanction European companies that do business with Iran.

Last week, a senior US State Department official described tightening the noose on Tehran as "one of our top national security priorities". "We believe that the Russian budget received an extra 4 trillion rubles thanks to this deal with Saudi Arabia", said the head of RDIF Kirill Dmitriev in an interview with Russia's NTV channel.

Trump said in a tweet on Saturday that Saudi Arabia's King Salman bin Abdulaziz Al Saud had agreed to produce more oil.

But since then sources familiar with Saudi oil thinking have briefed the market about an imminent rise in Saudi output to a record.

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"Anyone trying to take away Iran's oil market (share) would be committing great treachery against Iran and will one day pay for it", Jahangiri warned in an open reference to Saudi Arabia.

Trump threatened in an interview that aired on Sunday to put sanctions on European companies that do business with Iran.

Tehran and Riyadh are members of the Organisation of Petroleum Exporting Countries, a cartel that manages supply to the global market via production quotas so as to keep prices in member states' favour.

In late 2016, OPEC members and 11 non-OPEC countries struck a deal to reduce oil output by 1.8 million barrels per day compared to October 2016.

At the same time, Iranian Oil Minister Bijhan Zanganeh reminded Riyadh that "any increase in the production by any member country beyond commitments stipulated in OPEC's decisions. would constitute a breach of the agreement".

"Oil is already being offered on the bourse, about 60,000 barrels per day, but that has been only for exports of oil products", Jahangiri said.

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