President Donald Trump said Saturday that he's asked Saudi Arabia to significantly increase oil output in order to bring down global crude prices, a move rival Iran has said would effectively mean asking the world's largest producer to leave OPEC.
Trump suggested that 'turmoil' in Iran and Venezuela has led to a sharp increase in prices, which hit a four-year high last week despite an agreement by OPEC members that would, in effect, add as many as 1 million barrels of oil to the market each day. Trump then said that King Salman, the country's highest politician, agreed with his assessment, although it was unclear whether the consensus was with respect to high prices or the need to increase output.
Saudi Arabia issued a statement regarding the conversation, which took place by telephone, noting an agreement to stabilise global crude markets but declining to quantify, or even allude to, any specific increase in production. Saudi Arabia has previously said it would boost output to 11 million barrels per day, but Trump's suggestion of a 2 million increase would take it total past 12 million and close to its theoretical capacity.
Iran's OPEC governor, Hossein Kazempour Ardebili, was quoted as saying any agreement to increase output at the behest of the President would be akin to "calling on them to walk out from" from the cartel.
Iran, as well as all OPEC members and non-member allies, such as Russia, agreed last week to adhere to production cuts established in December 2016 in order to bring prices down and add more crude to the market.
Anticipated U.S. sanctions on Iran, however, which were re-imposed by Donald Trump and May but won't kick-in until November 4, give Tehran little incentive to increase production from its current 4 million barrel-a-day pace as customers and various countries around the world face the threat of reprisals from Washington if they purchase it.
Various political, military and operational issues have impacted global oil supply over the past month, causing prices to ramp continuously higher over the past week.
In mid June, for example, rebel attacks at facilities in Ras Lanuf and Es Sider in Libyan slowed production by more than 450,000 barrels a day, while output in Venezuela continues to be hampered by the country's chronic lack of investment and the ongoing government crisis that followed disputed presidential elections last month.
WTI crude for August delivery, the U.S. benchmark, traded at the highest level since November 2016 late Friday, capping one-week gain of 8.2% that took prices to $74.15 per barrel. Brent crude contracts for September delivery, which are more tightly-linked to global crude prices, rose $1.59 a barrel Friday to end the week 5% higher at $79.44 per barrel.
U.S. crude production, which hit a record in March, eased modestly in April to 10.467 million barrels per day, the Energy Information Administration reported Thursday, while weekly exports hit a record 3 million barrels per day in the week ending June 22.