EMEA News
Saudi Plans Record Oil Production as Iran Complains That Opec Output Deal Lacks Actual Numbers
An increase per day of 800,000 barrels compared to May: that is the amount Saudi Arabia on Tuesday announced it will pump in July, in order to fulfill the vow made last week by Khalid al Falih, the kingdom's energy minister, to "do whatever is necessary to keep the market in balance" and prioritize its customers.
And although the announcement isn't surprising, pundits are noting that the amount would surpass the previous high of 10.72 million barrels per day (bpd) in November 2016, plus it is further indication that the Saudis are either bowing to pressure from U.S. president Donald Trump to turn on the taps and lower prices for his nation's benefit, or, alternatively, feeling inclined to side with a country that is attempting to marginalize rival Iran - and perhaps even crush the Islamic republic's regime altogether).
Bloomberg reported that people briefed on the country's output policy think the Saudis' actual production level in July will depend on demand for exports and domestic consumption, so could end up ranging between 10.6 million and 11 million bpd.
Bloomberg also pointed out that data it compiled for early June showed a significant jump in exports from the kingdom, with shipments in the first 20 days of the month running about 500,000 bpd higher than the average for the whole of May.
The news agency stated, "If sustained, that would indicate the biggest monthly output increase in more than a decade and suggests that Aramco has already raised output this month to a level that's higher than many in the market expected.
Whatever the amount the Saudis ultimately pump in July, it won't be greeted warmly by Iran, which on Tuesday was marginalized by Trump's edict for companies to cease buying oil from the Islamic republic by November 4, and snubbed by the Organization of the Petroleum Countries (OPEC) last week when the cartel refused to condemn the U.S. for reinstating the sanctions against the country.
Left with little recourse other than to complain about the state of things, Bijan Zanganeh, oil minister for Iran who most recently was proven wrong in his prediction that OPEC wouldn't agree to raise member output to compensate for a rapidly tightening market, on Tuesday said that the cartel's agreement failed to announce a clear target for the output increase, leaving traders unsure of how much more will actually be pumped.
He told the Iranian news agency SHANA, "Despite what some (members) say about OPEC's production rise of around 800,000 barrels (per day), there is no figure in the statement.
"Iran's suggestion was to first balance oil in the market, secure members' 100 percent compliance to the agreement, and then decide on a production increase in next meeting if needed."
Although arguably trivial, the Saudi's treatment of Iran during last week's OPEC meeting in Vienna is indicative of the hostility between the two countries: supposedly as a conciliatory gesture to Iran's inability to sway the cartel with anti-U.S. rhetoric, the Saudis included Iran in a committee meeting of nations tasked with monitoring output levfels, even though Iran isn't a part of that committee.
