Saudi ready to boost oil output, spare capacity: minister

Marcus Newton
October 24, 2018

Oil prices plunged about 5 per cent on Tuesday to two-month lows as a sell-off in global equity markets raised worries about demand growth and after Saudi Arabia said it could supply more crude quickly if needed, easing concerns ahead of United States sanctions on Iran.

The kingdom, which produces more than a tenth of global supplies, had vowed on Monday not to withhold its output as a political weapon amid the worldwide backlash over the murder of journalist Jamal Khashoggi.

However, an internal document reviewed by Reuters suggested OPEC is struggling to add barrels as an increase in Saudi supply was offset by declines elsewhere. And those interests are what many countries are considering as they look at the role the Saudi Arabian government may have played in the killing of one of its most prominent critics, journalist Jamal Khashoggi.

"Saudi Arabia is a very responsible country, for decades we used our oil policy".

Speaking to Russia's TASS news agency about whether there could be a 1973-style oil embargo on the West, which saw petrol prices rocket after Saudi Arabia slapped countries including the USA with a ban, Mr Falih said: "There is no intention". Saudi Arabia must put in place measures to ensure something like this can never happen again.

Saudi Energy Minister Khalid Al-Falih said OPEC and its allies are in "produce as much as you can mode".

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Other non-OPEC producers have also produced only 66,000 barrels per day of additional oil between May and September, the Iranian minister said, citing OPEC's estimates.

Oil prices spiked on the move, as they did later in 1979 because of the Iranian revolution.

The Dow Jones Industrial Average fell more than 450 points, with industrial bellwethers Caterpillar and 3M leading the index lower and stoking concerns about slowing global economic growth. Riyadh has refrained from using oil as a direct weapon since then. "That policy has been consistent for many years", Falih said. He added that Riyadh had capacity to increase output to 12 million bpd and its Gulf OPEC ally, the United Arab Emirates, could add another 0.2 million bpd.

USA crude oil production has climbed by nearly a third since mid-2016 to around 11 million barrels per day, and rising drilling activity points to further increases.

US crude inventories have risen by more than 22 million barrels over the last four weeks, the biggest increase since 2015, when the oil market was heavily oversupplied.

Other reports by MaliBehiribAe

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