Saudis pump more oil, then question need

Under pressure from the White House, Saudi Arabia has rushed to boost oil production — only to discover that global markets might not yet need it.

The kingdom’s crude output surged the most in three years last month, as the United States asked for help in cooling gasoline prices and filling in the supply gap that will be created by sanctions on Iran. Yet the Saudis are struggling to sell as much extra oil as they’d hoped, and are privately fretting that they may have opened the taps too quickly, according to people briefed by Riyadh in the last few days.

“Saudi Arabia and several other OPEC members have increased exports sharply ahead of sanctions on Iran, and the timing mismatch between these effects is pressuring oil prices,” said Martijn Rats, managing director at Morgan Stanley in London.

A rare public statement from the Saudi Energy Ministry on Thursday could be taken as an illustration of their unease. It rejected as “without basis” any concerns that the kingdom was moving to oversupply world markets. Exports would be stable this month and fall in August, it said.

The Saudis and their allies promised at the Organization of Petroleum Exporting Countries’ last meeting in late June to boost output by about 1 million barrels a day to offset disruptions in Venezuela and Libya, plus the looming losses in Iran.

They were reacting to pressure from President Donald Trump, who was criticizing the cartel on Twitter after London crude price hit a three-year high of more than $80 a barrel in May.