Saudi Arabia signals longer-term oil pact with Russian Federation

Oct 24, 2018, 01:47
Saudi Arabia signals longer-term oil pact with Russian Federation

Oil fell to the lowest level since August after Saudi Arabia pledged to meet any supply shortfall that materializes from Iranian sanctions and as tumbling equities weakened sentiment.

Saudi Arabia's energy minister has used public comments over the past week to tone down the kingdom's veiled threat to use oil as a political weapon to retaliate against possible sanctions related to the Khashoggi killing.

Brent crude, the global oil benchmark, fell 2.7 per cent to trade below $78 a barrel this afternoon as the comments helped ease fears over a looming supply crunch.

"As long as America targets Iran, one of the biggest crude producers, with sanctions, the volatility in the oil market will continue", Tasnim news agency quoted Oil Minister Bijan Zanganeh as saying.

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Other non-OPEC producers have also produced only 66,000 barrels per day of additional oil between May and September, the Iranian minister said, citing OPEC's estimates.

Higher prices for oil is a tax on the middle/lower class in the US.

Additionally, U.S. Treasury Secretary Steve Mnuchin, visiting Israel this week, said on Sunday that it will be hard for countries to receive waivers on Iran oil sanctions.

In addition to its crude investments, Saudi Arabia intends to partner in liquefied natural gas projects overseas and start trading LNG in the future.

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Iran's Oil Minister Bijan Namdar Zanganeh said oil exports remain "unstoppable" and the market will be in "turmoil" as long as the US imposes sanctions on the Persian Gulf nation's energy industry, Tasnim news agency reported. Washington is largely depending on Saudi Arabia to fill the gap left by the loss of the Iranian barrels. "So we have to use oil reserves". We work to stabilize global markets and facilitate global economic growth.

"I cannot give you a guarantee, because I cannot predict what will happen to other suppliers", Falih said, when asked whether the world can avoid oil hitting $100 per barrel again. "That policy has been consistent for many years", Falih said.

USA crude oil production has climbed by nearly a third since mid-2016 to around 11 million barrels per day, and rising drilling activity points to further increases.

Saudi's foreign minister Adel al-Jubeir said to United States broadcaster Fox: "This was an operation that was a rogue operation". He added that Riyadh had capacity to increase output to 12 million bpd and Gulf OPEC ally, the United Arab Emirates, could add a further 200,000 bpd.

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