Saudi king said will boost oil output if needed, says White House

Donald Trump

Trump says Saudi king agreed to raise oil production up to 2 million barrels

"Saudi Arabia can use some of its stocks to boost exports, visible to the United States president, while it takes time to ramp up operating capacity", said Olivier Jakob, head of Swiss-based consultant Petromatrix GmbH.

Trump had blamed the Organization of Petroleum Exporting Countries (OPEC) for keeping oil prices high in the past while he was a businessman, and has recently reiterated his criticism against the cartel.

"Just spoke to King Salman of Saudi Arabia and explained to him that, because of the turmoil & dysfunction in Iran and Venezuela, I am asking that Saudi Arabia increase oil production, maybe up to 2,000,000 barrels, to make up the difference", Trump announced in an early morning tweet. Prices over the past two months have been higher than any time since late 2014, according to the Energy Information Administration.

"In response to the approval of the President (trump - if) on the deficit in the oil market, king Salman affirmed that the Kingdom has a reserve production of 2 million barrels per day, which can be used if necessary to stabilize the market", - reads the statement released by the White house.

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The statement did not confirm that Saudi Arabia had agreed to the two million barrels a day figure.

However the US State Department then tried clarified those comments after prices jumped, with an official saying that the Trump administration is "willing to work with countries that are reducing their imports on a case-by-case basis"- suggesting that imports of Iranian oil may not reach zero.

OPEC agreed with Russian Federation and other oil-producing allies this month to raise output from July by about 1 million bpd. The International Energy Agency, the Paris-based group that represents consumer countries, recently estimated what it called "short order supply" from the Middle East, including Saudi Arabia, at 1.14 million barrels a day.

"The Trump support base is probably the part of the USA electorate that will be the most sensitive to an increase in USA gasoline prices", Halff said. "While Saudi Arabia has the capacity in theory, it takes time and money to bring these barrels online, up to one year", said Amrita Sen of consultancy Energy Aspects.

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Oil prices rose sharply in the spring as production collapsed in crisis-ridden Venezuela and traders anticipated Trump's withdrawal of the United States from the Iran nuclear deal. Saudi Energy Minister Khalid Al-Falih indicated the group's action would add almost 1 million barrels a day to the market.

The output increases come as the United States has urged some OPEC members to raise output to compensate for supply losses caused by renewed US sanctions on Iran.

Meanwhile, Iran's Supreme Leader Ayatollah Ali Khamenei on Saturday accused the United States of trying to turn Iranians against their government. Trump ordered the re-imposition of USA sanctions against Iran that were suspended under the accord.

The value of Iran's currency, the rial, has tumbled since Washington backed out of the Iran nuclear deal in May.

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Output is expected to rise to 11 million barrels in July, according to Reuters.

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