Published: Thu, July 05, 2018
Markets | By Erika Turner

Oil falls as Saudi, Russian output rises

Oil falls as Saudi, Russian output rises

To make up for potential shortfalls in supply from Iran sanctions as well as other disruptions including Libya and Venezuela, the Organization of the Petroleum Exporting Countries (OPEC) has agreed with Russian Federation and other oil-producing non-OPEC members to raise output from July.

U.S. crude inventories fell by 4.5 million barrels to 416.9 million barrels in the week to June 29, the American Petroleum Institute (API) said on Tuesday.

The president, in an interview with Fox News's "Sunday Morning Futures with Maria Bartiromo also piled pressure on close United States allies with a threat to sanction European companies that do business with Iran". On Monday, Hook expressed confidence that the USA sanctions policy would not prompt mass shortages, but analysts have expressed doubt that Saudi Arabia can increase production by as much as Trump described.

"The Trump administration's plan for Iran sanctions is now abundantly clear".

Trump was not specific on whether the additional 2 million barrels was a per-day figure - but worldwide daily demand is nearing 100 million bpd. "We want to work with these countries to build a strong global effort", he said.

Late last week, Iran's Oil Minister Bijan Zangeneh urged the Organization of Petroleum Exporting Countries (OPEC) to prevent some of its members from increasing output without arriving at a consensus.

Still, Iran vowed on Sunday to defeat USA efforts to block its oil exports and warned rival producer Saudi Arabia it would never take Tehran's "place" on the worldwide oil market.

Some key countries are reliant on Iranian oil imports, including India and Turkey.

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The movement came after Iran reportedly threatened to disrupt oil shipments from the Middle East Gulf if Washington pressed ahead with sanctions against Iran.

The announcement comes after US President Donald Trump said on Saturday that King Salman had agreed to his request to ramp up oil production.

Some argue that Saudi Arabia, Russia and the UAE, along with surging USA exports will cover the shortage.

Apart from Iran, Venezuela, Libya and Angola are also facing chronic production issues.

Inventories at Cushing fell 2 million barrels last week, according to a separate forecast compiled by Bloomberg.

An International Energy Agency scenario projects oil production falling by around 1.5 million bpd due to the loss of Iranian and Venezuelan oil.

"We are working to minimize disruptions to the global market, but we are confident there is sufficient global spare oil capacity", Hook said.

The president also had tough words for other United States allies. "Of course. That's what we're doing, absolutely", he said.

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