The leader of Saudi Arabia promised US President Donald Trump that he can boost oil production if needed and the country has 2 million barrels per day of spare capacity available, the White House said on Saturday. It was only a few days ago that Saudi Arabia and its coalition partners said that they would add 1 mb/d of supply back onto the market, with many of them acknowledging that, in reality, the figures would be closer to 600,000 bpd because of the inability of so many producers to ratchet up output.
"All the potential shortfalls could outstrip the production increase agreed to by OPEC and Russian Federation", said Dominick Chirichella, Director of Risk Management at EMI DTN, noting the risk that supplies from Iran could be cut further if other countries follow the US lead and cut imports from that country, the fifth-largest oil producer in the world. "Kuwait will raise its oil production from tomorrow to 2.785 million barrels, a daily increase of 85,000 compared to May, based on last week's production cut agreement", Rashidi told Arabic-language daily Al-Rai.
Saudi Arabia, the world's top oil exporter, plans to pump as much as 11m barrels of oil per day from next month, an industry source told Reuters.
Saudi Arabia's King Salman bin Abdulaziz Al-Saud, flanked by an interpreter, welcomes U.S. Defense Secretary James Mattis on April 19, 2017 in Riyadh, Saudi Arabia. Its record is 10.72 million barrels in a day.
"Because of (sanctions on) Iranian crude, we are looking at USA heavy crude" as a substitute, the source said, in particular grades such as Southern Green Canyon and Mars, which are similar to crude from Iran.
Russian Federation breached its oil-output quota agreed with for a third straight month as the producing alliance prepares for crucial talks this month on increasing supplies.
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During the previous round of sanctions, India was one of the few countries that continued to buy Iranian oil, although it had to reduce imports as shipping, insurance and banking channels were choked due to the European and U.S. sanctions.
This week, a US State Department official said Washington would work with countries on a case-by-case basis to try and stop them importing Iranian oil. Later on Saturday, the Saudi SPA news agency also reported about the conversation between Trump and Salman but has not mentioned the agreement announced by Trump. There are plenty of other signs the sanctions could take out a significant share of the 2.5 million barrels of crude a day the Middle Eastern nation now exports.
Iran's rial currency has lost up to 40 per cent of its value since last month, when Trump pulled out of the 2015 nuclear deal. USA trade tensions with China and elsewhere could also have an impact on oil supply.
European refiners, anxious about the United States sanctions on Iran which are set to be more severe than those imposed in 2012, are cutting their imports of Iranian oil.
China remains the largest importer of Iranian oil with 24 percent, followed by India with 18 percent. "If they do, it means the State Department is running OPEC".