Trump tweets Saudi king ‘agrees’ to boost oil production

Trump tweets Saudi king ‘agrees’ to boost oil production

Iran opposed any changes to the original production-cut deal at a time when its oil industry is facing renewed sanctions over Trump's decision to quit the global nuclear deal with Tehran. "He has agreed!" the president added.

"If the Saudis were really to raise output by 2 million barrels a day, their maximum capacity according to the International Energy Agency, that may backfire from an oil price standpoint by leaving the oil market with no meaningful spare capacity to handle any possible future supply problems, from geopolitics in places like Iran or Libya to hurricane season to any other issues", said Jason Bordoff, director of the center for global energy at Columbia University.

Trump said on Twitter that King Salman agreed to the request, but a state-run press agency in Saudi Arabia didn't confirm the two leaders reached any agreement.

"If this happens, (it) means Trump is asking Saudi Arabia to walk (away) from OPEC", he told Reuters. Since then, the two governments have announced hundreds of billions of dollars worth of contracts, with Trump openly bragging about how many United States jobs the Saudis were helping to create.

USA officials are pressing allies in Europe, Asia and the Middle East to adhere to the sanctions, which are aimed at pressuring Iran to negotiate a follow-up agreement to halt its nuclear programs. "There is no way one country could go two million barrels a day above their production allocation unless they are walking out of OPEC".

Saudi Arabia's pledge followed a meeting earlier this month in Vienna of OPEC members, Russian Federation and other oil producing countries.

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Saudi Energy Minister Khalid al-Falih met with US Secretary of State Mike Pompeo in Washington on Thursday to discuss energy security.

Brent crude, the global oil benchmark, topped $80 a barrel in mid-May, the highest level since November 2014. Brent crude stood at United States dollars 79.42 a barrel, while USA benchmark crude was at USD 74.15.

A gallon of regular gasoline sold on average in the USA for $2.85, up from $2.23 a gallon past year, according to AAA. That's up about 55 cents from the same period previous year, at a time Trump's Republican Party is trying to hold on to its majorities in Congress in the November midterm elections.

The Saudi government said on its official website that the two leaders had spoken about oil production, but avoided suggesting any specific deal had been struck. He questioned whether Trump's words would do anything to reverse the effects on the market of declining Iranian oil production.

"We'll need more oil down the road and there'll be nowhere to get it", said Flynn, of the Price Futures Group. "While Saudi Arabia has the capacity in theory, it takes time and money to bring these barrels online, up to one year", she said.

Saudi Arabia, for instance, says it has 2 million barrels a day in spare capacity, but analysts are skeptical that it can easily and sustainably add more than 700,000 barrels of production a day without drilling and other work that would take time.

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