Published: Thu, July 05, 2018
Business | By Eloise Houston

2018 budget in danger as Saudi Arabia pump 2m more barrels

2018 budget in danger as Saudi Arabia pump 2m more barrels

The developments were preceded by US President Donald Trump tweeting about his telephone talk with Saudi King Salman bin Abdulaziz Al Saud, who allegedly agreed to Washington's proposal to increase Riyadh's daily oil production to two million barrels. Despite President Trump nudging Saudi Arabia to boost production, it did little to tamp down the price of oil the past few days.

Saudi Arabia, the world's top crude exporter, said Tuesday it was prepared to use its spare production capacity, estimated at two million barrels, to balance the global oil market. "He has agreed", Trump tweeted on June 30. This reflects how petroleum dependence remains a national and economic security threat despite US crude oil production more than doubling in the past decade and reaching a new record this year.

"A key driver of the rise in prices has been the OPEC-Russia deal to cut oil output, compounded by collapsing Venezuelan production and the United States decision to end the Iran deal", National Australia Bank (NAB) said in its July outlook. As it stands now, Iran will have exported 2.2 million barrels of crude oil this June.

Former Shell Oil President John Hofmeister on the outlook for oil prices.

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".

This is while world oil prices have climbed higher as the Trump administration has pressured U.S. allies to end all purchases of oil from Iran. However, summer months in the US usually lead to increased demand for oil, boosting the price of gasoline in a midterm election year.

Iran has threatened to block oil exports through a key Gulf waterway in retaliation against any hostile USA action.

"If Libya's oil doesn't return fast to the market it will be an important test to OPEC's spare capacity, especially given that output from Venezuela and Iran is expected to fall significantly in the next couple of months", he added.

You can follow prices on Markets Insider.

Ardebili also claimed that Trump's words are "discrediting" OPEC. "The Iranian government has a plan". In this regard, Trump has asked Saudi Arabia to raise its oil production to help both his future and that of the Republicans.

OPEC-member Iran, however, has warned it would not accept other producers reaping the benefits by taking its market share.

Saudi General Authority for Statistics (GASTAT) indicated the GDP of the non-oil sector in Saudi Arabia achieved a more positive rate during the first quarter of this year, a growth of 1.6 percent. He also called on the United States to join world powers in a meeting with Iran in Vienna on Friday.

Like this: