"Saudi Arabia, UAE Turning OPEC Into A US Tool", Says Iran

Andrew Cummings
September 17, 2018

USA production has returned to 2014 boom levels, but the energy agency said US output will grow more slowly next year due to bottlenecks in getting oil to markets.

Iran's OPEC governor, Hossein Kazempour Ardebili, told Reuters on Friday that a "supply shortage" showed that Washington would not be able to meet its zero exports target.

In a move heavily opposed by Iran, OPEC and other oil producers including Russian Federation agreed in June to boost crude output by around a million barrels a day, reversing course after supply cuts that had cleared a global glut and boosted prices.

Further sanctions on oil and transactions with the central bank of Iran will come into effect on November 4.

The United States is under the process of imposing new economic sanctions after the Trump administration chose to pull out of the nuclear deal with Iran.

The build-up in Iranian oil supplies underscores the pressure that Iran is facing as Washington aims to bring Iranian oil exports down to zero to force Tehran to re-negotiate a nuclear deal.

Brent rose above $80/Bbl Wednesday for the first time since May, spurred by expectations us sanctions against Iran's oil exports, which will start in early November, will tighten global markets.

Price rises were capped after US Energy Secretary Rick Perry said Saudi Arabia, other members of OPEC and Russian Federation were to be admired for trying to prevent a spike in global oil prices. It did not change its forecast that worldwide demand will rise 1.4 million barrels a day this year and 1.5 million a day in 2019.

Oil processors in South Korea, Iran's top customer for South Pars condensate, halted Iranian oil liftings in July as banks, insurance and shipping companies wound down business related to Iran before USA sanctions the country's petroleum sector kick in on November 4.

Azlin Ahmad, editor-crude oil at Argus Media, said she has seen strength in the crude oil prices this week and lot of it hinges on Iran as countries from Asia-Pacific started to reduce their imports of Iranian crude without the promise of a waiver from the US.

Demand for oil grew more slowly in the second quarter, particularly in Europe and Asia but also because of higher gasoline prices in the US, the energy group said.

China will not buckle to U.S. demands in any trade negotiations, the major state-run China Daily newspaper said, while U.S. President Trump said on Twitter he felt no pressure to strike a deal with China.

The White House has announced that Saudi Arabia's King Salman had promised Trump to raise oil production and that the kingdom had two million barrels per day of spare capacity to boost output to offset a decline in supply from Iran.

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