Published: Tue, October 23, 2018
Business | By Tara Barton

Oil rises above US$80, Saudi Arabia plans output increase

Oil rises above US$80, Saudi Arabia plans output increase

There has been concern that just as markets tighten with the start of the US sanctions against Iran, Saudi Arabia could cut crude supply in retaliation for potential sanctions against it over the Khashoggi killing.

"The request that America made to Saudi Arabia and other OPEC countries is to be sure that if there is any loss of supply from Iran, that we will supply that".

Despite this, Sukrit Vijayakar, director of energy consultancy Trifecta, said "markets are. tired of the impact of USA sanctions on Iran's oil sector", estimating the sanctions "could impact up to 1.5 million barrels per day of supply".

Harsh, but with the deal maker in the White House, if the USA has a reason to squeeze Saudi Arabia to bump up production and keep a lid/lower crude oil prices, this is the time.

The incident has damaged the kingdom's image as a future investment hub, with global business leaders from Goldman Sachs Group Inc.to Uber Technologies Inc. distancing themselves from Prince Mohammed and scrapping plans to attend his business forum this week.

"Saudi Arabia has been coherent in its policy".

Saudi Arabia's Energy Minister Khalid Al-Falih was reported by Reuters, with the key headlines found below.

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US sanctions on Iran's oil sector start on November 4 and analysts believe up to 1.5 million bpd in supply could be at risk.

On Tuesday, Zangeneh said the kingdom has violated the agreement.

There is no guarantee that the oil price will not exceed $100 per barrel next year, Falih said.

In return for the crude oil supplies from Iran, Russia would provide unspecified trade and service benefits to Tehran, according to the Israeli document, which makes clear that the goal of this deal is to help Iran to evade the USA sanctions on its petroleum industry that will snap back in early November.

The Organization of the Petroleum Exporting Countries, of which Saudi Arabia and Iran are members, agreed in June to boost supply to make up for the expected disruption to Iranian exports. The deal "will allow us to intervene to rebalance the market in any appropriate time from January onward", he said. It's still too early to say what strategy the group will adopt in 2019 given current uncertainties, said Al-Falih.

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