Trump claims Saudi Arabia agreed to oil production hike, Riyadh doesn’t confirm

American crude price jumps to four-year high on massive US inventory draw

The source said this time the situation is different.

Trade disputes between the United States on one side and major economies including China, India and the European Union on the other are beginning to cloud the outlook for global economic growth.

Meanwhile, UK-based energy consultancy group, Fact Global Energy (FGE), reported in its June newsletter that Washington is determined to "push Iran's exports to zero". "There's not really much Iran can do to maintain its export level".

"All the potential shortfalls could outstrip the production increase agreed to by OPEC and Russian Federation", said Dominick Chirichella, Director of Risk Management at EMI DTN, noting the risk that supplies from Iran could be cut further if other countries follow the US lead and cut imports from that country, the fifth-largest oil producer in the world.

Haley, now in Delhi, spoke with US Secretary of State Mike Pompeo early on Wednesday, before meeting Modi.

The United States has been seeking to convince countries to halt imports of Iranian oil from November, when Washington will re-impose sanctions after pulling out of the deal aimed at halting Iran's nuclear ambitions.

Some sanctions take effect after a 90-day "wind-down" period ending on Aug 6, and the rest, notably in the petroleum sector, following a 180-day "wind-down period" ending on Nov 4.

European refiners, anxious about the U.S. sanctions on Iran which are set to be more severe than those imposed in 2012, are cutting their imports of Iranian oil.




Iranian OPEC governor Hossein Kazempour Ardebili told Bloomberg that Trump's request amounts to "calling on [Saudi Arabia] to walk out from OPEC".

Under pressure from the U.S. sanctions, Reliance Industries Ltd, the operator of the world's biggest refining complex, has chose to halt imports.

Other Indian companies have yet to announce whether or not they are reducing their imports, and Iranian oil manufacturers might be waiting for any developments coming from the country. Every month, it usually buys around 5.5 million to 6 million barrels of oil from Iran.

If Trump's comments are accurate, oil analyst Phil Flynn said it could immediately knock $2 or $3 off a barrel of oil. Growing concerns over US' relations with major oil producers like Iran and Venezuela is threatening the market.

For Saudi Arabia, which last week piloted proposal to raise OPEC output by one million barrels per day, the sanctions against Iran presents an opportunity to recover market share that shrank after last year's output curbs.

But in a statement Saturday evening, the White House said King Salman bin Abdulaziz affirmed that Saudi Arabia has two million barrels a day of spare production 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".

Replacing Iranian oil will not be a problem but margins will be hit as Tehran offers the best commercial terms, another official said.

Prime reasons for OPEC oil production dropping by substantially more than had been planned have been the collapse in Venezuelan production, coupled with production falls in Angola and Libya.

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