Saudi cabinet says ready to use spare oil capacity as needed

Gladys Abbott
July 4, 2018

Oil is surging as the US pushes allies to end imports of Iranian crude, as global supply disruptions persist and American crude inventories are already at the lowest since January.

President Trump lashes out at OPEC with a warning to stop manipulating oil markets and piles pressure on U.S. ally Saudi Arabia.

A US State Department official said in a briefing that more than 50 worldwide companies intend to drop the use of Iranian oil before the 4 November restart of the sanctions.

The official warned countries including China and India, who are key buyers of Iranian oil, that they should stop purchasing crude from the country before the November deadline or face United States sanctions.

Mr Trump took another swing at his European allies saying they dealt unfairly with the U.S. over trade. "Of course. That's what we're doing, absolutely", he said.

King Salman briefed the cabinet on the telephone call he had received from President Donald Trump during which the two leaders confirmed the need to exert efforts to maintain the stability of oil markets and the growth of the world economy. "He has agreed", Trump tweeted.

Jahangiri said it was not that "simple". "We do not know how the market will react but prices will surely decrease".

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"In this battle, any country that tries to take Iran's place on the oil market will be guilty of treason against Iran. and surely one day it will pay the price of this treason", he said.

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".

The development came days after the oil-rich Persian Gulf state, which is the world's largest oil exporter, agreed to substantially raise production.

After reducing production by more than 1.8 million barrels daily since January past year to drain a global glut, the producers decided in Vienna on June 23 to reverse course. Officials say they are determined to keep the oil flowing.

"Our goal is to increase pressure on the Iranian regime by reducing to zero its revenue on crude-oil sales", said Brian Hook, the State Department's director of policy planning, at a briefing with reporters.

Saudi Arabia's output is up by 700,000 barrels per day (bpd) from May, a Reuters survey showed, and close to its 10.72 million bpd record from November 2016.

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