Saudi Arabia has pledged to boost oil output if needed, as the Trump administration starts banning all Iranian oil exports.
US waivers on purchasing Iranian oil expired overnight for eight countries, including Iran’s main customer, China.
But behind the scenes, Riyadh and Washington face a potentially long showdown over the number of extra barrels the kingdom would supply to global markets to keep crude prices stable.
The US is pushing to restart production in a field shared by the kingdom and Kuwait that could unlock half a million barrels a day, people familiar with the matter said.
At the same time, Saudi Arabia — in need of higher oil prices to keep its state budget balanced — is lobbying within the Organisation of the Petroleum Exporting Countries to change the way the cartel calculates whether the market is adequately supplied as a way to show the US that no more oil is needed.
The head of OPEC last night warned against the political use of oil markets during a trip to Tehran. Speaking at an oil conference, OPEC secretary-general Mohammed Barkindo said his group was working to “depoliticise oil” and “insulate our organisation against geopolitics”. He didn’t directly address the US sanctions.
Read the article by Benoit Faucon in The Australian Business Review (from The Wall Street Journal).