Opec, Russia rebuff Trump’s call for immediate boost to oil output
Opec’s leader Saudi Arabia and its biggest oil-producer ally outside the group, Russia, ruled out any immediate, additional increase in crude output, effectively rebuffing US President Donald Trump’s calls for action to cool the market.
“I do not influence prices,” Saudi Energy Minister Khalid al-Falih told reporters as the Organisation of the Petroleum Exporting Countries (Opec) and non-Opec energy ministers gathered in Algiers for a meeting that ended with no formal recommendation for any additional supply boost.
Benchmark Brent oil reached US$80 a barrel this month, prompting Trump to reiterate on Thursday his demand that Opec lower prices.
The price rally mainly stemmed from a decline in oil exports from Opec member Iran due to fresh US sanctions.
“We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices! We will remember. The Opec monopoly must get prices down now!” Trump wrote on Twitter.
Falih said Saudi Arabia had spare capacity to increase oil output but no such move was needed at the moment.
“My information is that the markets are adequately supplied. I don’t know of any refiner in the world who is looking for oil and is not able to get it,” Falih said.
Russian Energy Minister Alexander Novak said no immediate output increase was necessary, although he believed a trade war between China and the United States as well as US sanctions on Iran were creating new challenges for oil markets.
Oman’s Oil Minister Mohammed bin Hamad Al-Rumhy and Kuwaiti counterpart Bakhit al-Rashidi told reporters after yesterday’s talks that producers had agreed they needed to focus on reaching 100% compliance with production cuts agreed in June.
That effectively means compensating for falling Iranian production. Al-Rumhy said the exact mech- anism for doing so had not been discussed.
The statement from Trump, meanwhile, was not his first criticism of Opec.
Higher gasoline prices for US consumers could create a political headache for Republican Trump before mid-term congressional elections in November.
Iran, Opec’s third-largest produc- er, has accused Trump of orchestrating the oil price rally by imposing sanctions on Tehran and accused its regional arch-rival Saudi Arabia of bowing to US pressure.
Yesterday, Iranian Oil Minister Bijan Zanganeh said Trump’s tweet “was the biggest insult to Washington’s allies in the Middle East”.
Seeking to reverse a downturn in oil prices that began in 2014, Opec, Russia and other allies decided in late 2016 to reduce supply by some 1.8 million barrels per day (bpd).
In June this year, however, after months of cutting by more than their pact had called for, largely due to involuntary reductions from Venezuela and other producers, they agreed to boost output by returning to 100% compliance.
That equates to an increase of about 1 million bpd, but the latest figures show they are some way from achieving that target.
In August, Opec and its allies cut production by 600,000 bpd more than their pact required, mainly as a result of falling output in Iran as customers in Europe and Asia reduced purchases ahead of the US sanctions deadline.
Iran told Opec its production had been steady in August at 3.8 million bpd. Opec’s own estimates, according to its secondary sources such as researchers and ship-trackers, put Iranian output at 3.58 million bpd.
Falih said returning to 100% compliance was the main objective and should be achieved in the next two to three months.
Although he refrained from specifying how that could be done, Saudi Arabia is the only oil producer with significant spare capacity.
“We have the consensus that we need to offset reductions and achieve 100% compliance, which means we can produce significantly more than we are producing today if there is demand,” Falih said.
“The biggest issue is not with the producing countries, it’s with the refiners, it’s with the demand. We in Saudi Arabia have not seen demand for any additional barrel that we did not produce.” — Reuters