One week after President Trump tweeted his latest demand for OPEC to cut oil prices (presumably by boosting production), Saudi Arabia is reportedly considering doing just that.
We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices! We will remember. The OPEC monopoly must get prices down now!
— Donald J. Trump (@realDonaldTrump) September 20, 2018
CNBC reported early Monday that Saudi Arabia would be willing to pump as many as 550,000 additional barrels of oil per day if demand merits it. Of those, 250k would come from the Kurais field and 300,000 from resumed capacity from its pipeline at Manifa.
Sources confirm to CNBC that Saudi Arabia is able & willing to add as many as 550,000 new barrels of #oil onto the market *if* demand merits it.
250k barrels from Kurais field and 300,000 from resumed capacity from pipeline issues at Manifa.
— Brian Sullivan (@SullyCNBC) September 27, 2018
SAUDI’S MAY ADD UP TO 550K BBLS/DAY TO MARKET @CNBC
— Brynne Kelly (@BrynneKKelly) September 27, 2018
Meanwhile, Reuters reports that Saudi Arabia is planning to “quietly” pump more oil to offset an expected drop in Iranian production, even as it worries that it might need to restrict supply next year as US shale producers expand their output. Saudi is still weighing whether to go ahead with the production hike, with officials saying the Kingdom is worried about maintaining unity in the OPEC+ production block (which includes non-OPEC producers like Russia). The anonymous officials were reportedly familiar with private discussions at the OPEC meeting in Algiers earlier this month.
Two sources familiar with OPEC policy said Saudi Arabia and other producers discussed a possible production increase of about 500,000 barrels per day (bpd) among the Organization of the Petroleum Exporting Countries and non-OPEC allies.
But Riyadh decided against pressing for an official increase now as it realized it would not secure agreement from all producers present at the talks, some of which lack spare production capacity and would be unable to boost output quickly.
Such a move would have unsettled relations among producers, the sources said, with the Saudis keen to maintain unity among the so-called OPEC+ alliance in case Riyadh wants to change course in future and seek their collaboration on an output cut.
“There are only two months left until the end of the year, so why create tensions now between Saudi Arabia, Iran and Russia?” one source familiar with the Algiers discussions said.
The report comes after Saudi Energy Minister Khalid al-Falih said over the weekend that he’s concerned an oil production ramp in the US could push prices lower again as supply outstrips demand.
Brent crude dropped from session highs on the news: