Saudi says ready to pump more oil to balance market

Ag Reuters

Riyadh: Saudi Arabia, the world´s top crude exporter, said on Tuesday it was prepared to use its spare production capacity, estimated at two million barrels, to balance the global oil market.

"The kingdom is prepared to utilise its spare production capacity when necessary to deal with any future changes in the levels of supply and demand," a cabinet statement said following a meeting chaired by King Salman.

The statement said the kingdom will coordinate with other producers.

Saudi Arabia, which has been pumping around 10 million barrels per day, holds the largest spare capacity in the world and is the only country that can add substantial supply to the market.

The announcement comes after US President Donald Trump said on Saturday that King Salman had agreed to his request to ramp up oil production. It also comes more than a week after OPEC and non-OPEC producers, including the world´s top producer Russia, already announced an output rise.

After reducing production by more than 1.8 million barrels daily since January last year to drain a global glut, the producers decided in Vienna on June 23 to reverse course.

They agreed to bring down overcompliance with the cuts, resulting in an output increase of one million barrels a day, according to the Saudi energy ministry.

The move coincides with US plans to reimpose economic sanctions on OPEC member Iran, including halting oil exports.

Iranian President Hassan Rouhani on Tuesday decried the US plan as a "fantasy".

Meanwhile, the United Arab Emirates Energy Minister Suhail al-Mazrouei said that OPEC will aim to adhere to the group´s "overall conformity levels" for the rest of 2018 and that the UAE is ready to help alleviate any oil possible supply shortage.

"OPEC will, from July 1st, strive to adhere to the overall conformity levels for the remaining duration of the Declaration of Cooperation," Mazrouei, who holds the OPEC presidency for 2018, said in a statement.

The joint OPEC and non-OPEC producers´ committees will monitor overall compliance, he added.

"OPEC and non-OPEC countries participating in the Declaration of Cooperation remain unwavering in their commitment to contribute to market stability, in the interests of producers, consumers and the global economy," Mazrouei said.

On June 23, OPEC agreed with Russia and other oil-producing allies to raise output from July, with Saudi Arabia pledging a supply boost but giving no specific numbers.

OPEC and non-OPEC said in their joint statement after that meeting that they would raise supply by returning to 100 percent compliance with previously agreed output cuts that are set to continue until the end of 2018, when the Declaration of Cooperation is due to expire.

Some countries have been underproducing the targets specified by the Declaration of Cooperation, so returning to 100 percent compliance would increase output by around 1 million barrels per day, OPEC officials said.