Khalid Al Falih, Saudi Arabia’s Minister of Energy, Industry and Mineral Resources has stated that the kingdom is prepared to step in and help stabilise the global oil supply market following US President Donald Trump’s decision to abandon the international nuclear deal with Iran on May 8th, known as the Joint Comprehensive Plan of Action.
Market analysts have predicted that Iran’s output could drop by around 500,000 barrels per day (bpd) within six months. Saudi Arabia, alongside Russia, is leading a cartel of 24 nations, comprised of members of the Organisation of the Petroleum Exporting Countries (OPEC) and non-members, in scaling back production in a bid to mitigate the impact of rising US tight oil production and to support the price of Brent crude.
Since 2016 the kingdom’s output has dropped from 10.6mn bpd to a little over 9.9mn bpd in March of this year. Al Falih posted a comment on his Twitter feed saying, “I would like to confirm our commitment to oil market stability for the benefit of producers & consumers, Saudi will work closely with major OPEC, non-OPEC producers & with key consumers to mitigate the effects of any supply shortages.”
Trump has recently accused OPEC of artificially manipulating oil prices on his own Twitter feed.
Rising US production this year has led to the International Energy Agency predicting that it is possible the world’s only superpower could even supersede leading producer Russia by 2019 at the latest and so its own output could also fill some of the gap generated by the imminent economic penalties to be imposed on Tehran.