Oil slips below $80 on Saudi output pledge

london — Oil slipped below $80 a barrel on Monday as Saudi Arabia pledged to raise its crude production to a record, two weeks before US sanctions potentially choke off Iranian crude supplies.

Saudi Energy Minister Khalid Al Falih told Russia’s TASS news agency that his country had no intention of unleashing a 1973-style oil embargo on Western consumers, but rather was focused on raising output to compensate for supply losses elsewhere, such as Iran.

Al Falih said Saudi Arabia would soon raise output to 11 million barrels per day (bpd) from the current 10.7 million. He added that Riyadh had capacity to increase production to 12 million bpd.

Several US lawmakers have suggested imposing sanctions on Saudi Arabia over the killing of journalist Jamal Khashoggi. The kingdom, the world’s largest oil exporter, pledged to retaliate against any sanctions with “bigger measures”.

“Oil prices are pointing lower again, with Saudi credit default swaps ballooning,” said Stephen Innes, head of trading at foreignexchange trader Oanda.

Brent crude futures were down 39 cents at $79.39 a barrel by 1333 GMT, while US crude futures fell 45 cents to $68.67.

“As far as next year’s supply/ demand balance is concerned, it’s not justified for them [Saudi Arabia] to increase production,” PVM Oil Associates strategist Tamas Varga said.