Published: Wed, July 11, 2018
Markets | By Noel Gibbs

US President Donald Trump ‘destabilising’ oil market, says Iran

US President Donald Trump ‘destabilising’ oil market, says Iran

This is already seen as part of a political campaign by the USA to pressure the kingdom to ramp up oil production quickly to make up for the loss of Iranian barrels which the Trump administration has threatened to bring down to zero.

However, if the United States keeps pressures to ban Iran's crude sales, "it would disrupt OPEC plans because Iran produces five percent of the world total oil output and this is a significant amount", he added.

Consultants Kpler estimated the kingdom's oil exports rose by 407,000bpd in June to 7.62 million bpd compared with May.

Oil prices rose on Monday as investors focused on tight market conditions after data late last week showed United States crude inventories fell to their lowest in more than three years.

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Iran's petroleum minister said that "political issues should not interfere in the crude market, and supply and demand should determine the final oil price".

Iranian Oil Minister Bijan Namdar Zanganeh said the country's oil production and exports have not changed significantly despite USA efforts for disrupting Iran's market, IRIB reported on Saturday.

The market has grown concerned that if the Saudis offset the losses from Iran, that will use up global spare capacity and leave markets more vulnerable to further or unexpected production declines. So much can change in oil markets in the course of a few weeks.

The figures were contained in a communication from the kingdom to the Organization of the Petroleum Exporting Countries ("Saudi Arabia raised oil output by around 500,000 bpd in June", Reuters, July 5).

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Reuters in a report quoted estimates by the International Energy Agency (IEA) as showing that Saudi Arabia would have to pump an extra volume of at least 1 million barrels per day (bpd). At the time, Saudi Arabia's Khalid al-Falih said the number was "nominal" since not all OPEC members had the spare capacity to boost production.

Some observers question whether such high rates of production could be implemented quickly and sustained for any length of time.

Others believe that it is not clear whether the pipelines, processing plants and export terminals have enough capacity to handle 12 million bpd because such high flow rates have never been tested.

Domestic stocks had been drawn down to 234 million barrels at the end of April, the lowest level since November 2011.

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OPEC agreed in June on a modest increase in oil production starting in July after its leader, Saudi Arabia, persuaded arch-rival Iran to cooperate, following calls from major consumers to curb rising fuel costs.

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