The U.S. president has continued his strategy to dissuade European companies from dealing with Iran. File Image / Pixabay
Despite repeated assurances in the past from Organization of the Petroleum Exporting Countries (OPEC) members, including Saudi Arabia, that it could easily boost production at the drop of a hat, U.S. president Donald Trump is being criticized for asking the kingdom to add enough crude to the market to compensate for a drop in exports from Iran and Venezuela.
Beat Wittmann, a partner at Porta Advisors, told CNBC's "Squawk Box Europe" Monday that "This incident with the Saudis and the U.S. administration is just noise … you cannot order 2 million barrels like ordering a coffee somewhere."
Wittman was referring to the brash billionaire tweeting over the weekend that Saudi Arabia's ruler King Salman had agreed to his request to raise output by that amount; the Saudis later acknowledged that a discussion had taken place between the two leaders but did not disclose any production targets.
Beat Wittmann, partner, Porta Advisors
You cannot order 2 million barrels like ordering a coffee somewhere
Wittman went on to echo what is rapidly becoming a familiar prediction in analytical circles: "I think there will be ongoing upward pressure on oil back towards $100 and perhaps even more."
The key question is - and one that Trump would love nothing more than to be answered considering he wants prices at U.S. pumps to drop soon - can the Saudis pump much more oil?
Reuters quoted a host of analysts who insist the Saudis can barely raise output by 1 million bpd to 11 million bpd.
Amrita Sen, chief oil analyst at Energy Aspects, remarked, "While Saudi Arabia has the capacity in theory, it takes time and money to bring these barrels online, possibly up to 1 year."
Gary Ross, head of global oil analytics at S&P Global, said, "The Saudis do not have 2 million bpd of spare capacity as it would imply production of 12 million bpd; they can likely produce a maximum of 11 million and even that will be running their system at stress levels."
Ole Hansen, head of commodities research at Saxo Bank, stated, "I do not believe that Saudi can increase production to 12 million bpd, but they can increase exports by digging into their reserves."
Of course, this is still wild speculation from outsiders, filtered by a mainstream media that is, by and large, hostile towards the U.S. president; the one thing left undiscussed is the prospect that Trump, completely uninterested in political protocol and governed by a ruthlessness honed in the business world, could wind up getting what he wants if he persists long enough.
Calling it as he sees it as usual, Trump reiterated his familiar complaint about OPEC to Fox News, namely, that it is manipulating world oil markets, "and they better stop it because we're protecting those countries, many of those countries."
When asked if he will sanction European companies if they do business with Iran, he replied, "Yep, of course; that's what we're doing, absolutely."
While it could be argued that Trump's single-minded aim to gain global energy supremacy by supporting American shale producers has until recently kept a cap on crude prices, that didn't prevent Bijan Zanganeh, oil minister from Iran, from blaming the president's policies (ie: tearing up the Iran nuclear deal) for the current high prices - an ironic turn of events considering that when the deal was in effect, the Islamic republic repeatedly bragged about its goal to jack up production, regardless of its effect on the world market.