Iran's minister of petroleum says Saudi Arabia has submitted to USA pressure, violating an OPEC agreement reached in June not to raise its production. A conflict between the two countries would potentially mean a sharp increase in oil prices as Saudi limits production.
On Tuesday, Zangeneh said the kingdom has violated the agreement.
Top crude oil exporter Saudi Arabia has pledged to keep markets supplied despite its increasing isolation over the killing of Saudi journalist Jamal Khashoggi. "And that happened", he told Bloomberg in an interview.
"Brent and WTI got caught up in the risk-off markets and the API release later in the day didn't offer any chance of reprieve as it reported a huge build of 9.88m barrels, against expectations of a much smaller increase". "So we did our job and more", the crown prince claimed, prompting Zangeneh to dismiss the remarks as "nonsense".
"I do not influence prices", Falih said then.
The Riyadh conference is aimed to generate investments in the country as part of a broad economic transformation plan to wean it off reliance on oil. The sanctions prohibit other nations to enter into new contracts with Iran immediately and provide a six-month period ending 4 November to wind-down existing commitments with the country, especially with Iranian oil companies. The reassurances seem to have worked, with oil markets more focused on American crude stockpiles than the potential fraying of the U.S. -Saudi relationship.
Falih said Saudi Arabia would soon raise output to 11 million barrels per day (BPD) from the current 10.7 million. Opec aims to bring down inventories to their five-year average to avert a repeat of the oil-price crash in mid- 2014 from $115 a barrel to less than $30 a barrel in the first quarter of 2016. "Therefore, Russia can not increase production further in the short term, without investing in its upstream industries".
Higher crude oil prices in the end of 2018 and 2019, in comparison with the four previous years, will likely motivate producers globally to increase output.
By 12:30 PM ET (16:30 GMT), U.S. West Texas Intermediate (WTI) was down $3.03, or 4.4%, at $66.14 a barrel.
EIA forecast that surplus crude oil production capacity in the Organization of the Petroleum Exporting Countries (OPEC) could be used to replace some of Iran's crude oil barrels that are coming off the market.
China's largest refiners, state-held Sinopec and China National Petroleum Corporation (CNPC), haven't booked any crude oil cargoes from Iran for November due to fears that in doing so, they would be in breach of the USA sanctions on Iranian oil returning in less than two weeks, Reuters reported on Wednesday, quoting two people with direct knowledge of the plans.
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