Iran's oil minister says USA sanctions can not stop crude exports

Alicia Cross
October 24, 2018

"Tariff concerns, renewed weakening in Chinese equities, emerging market worries and the ongoing investigations of the Saudi participation in the Khashoggi murder are combining to force major liquidation out of the equity space that is easily flowing into the oil complex", said Jim Ritterbusch, president of Ritterbusch and Associates in a note. Saudi Arabia must put in place measures to ensure something like this can never happen again.

Khalid Al-Falih, the Saudi energy minister, said on Tuesday that OPEC and non-OPEC countries, principally Russian Federation, are expected to sign an "open-ended agreement" at year-end that would extend, perhaps indefinitely, a supply agreement first struck in 2016.

Falih said he would not rule out the possibility that Saudi Arabia would produce between 1 million and 2 million barrels per day (bpd) more than current levels in future. 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.

Additionally, Fatih Birol, executive director of the International Energy Agency (IEA), said on Monday that other producers may struggle to fully make up for the expected Iran disruption, and that oil prices could rise further.

Several U.S. lawmakers have suggested imposing sanctions on Saudi Arabia in recent days while the kingdom, the world's largest oil exporter, has pledged to retaliate against any sanctions with "bigger measures".

On Tuesday, he said Saudi Arabia still intends to increase production to meet demand as US sanctions shrink Iran's crude exports.

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Since that agreement, oil prices have more than doubled and were now hovering at just under $80 a barrel.

"If 3 million barrels per day disappears, we can not cover this volume".

Oil prices spiked on the move, as they did later in 1979 because of the Iranian revolution. We work to stabilize global markets and facilitate global economic growth.

There is no guarantee that the oil price will not exceed $100 per barrel next year, Falih said.

The reassurances seem to have worked, with oil markets more focused on American crude stockpiles than the potential fraying of the U.S. -Saudi relationship. 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.

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