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Saudi Arabia, Upset Over Trump's Iran Waivers, Seeks Deep Oil Output Cut

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Saudi Arabia, Upset Over Trump's Iran Waivers, Seeks Deep Oil Output Cut

Post  GirlBye on Sat Nov 17, 2018 1:16 pm

Angered by the U.S. move that has raised worries about oversupply, Saudi Arabia is now considering cutting output with OPEC and its allies by about 1.4 million barrels per day, or 1.5%, of global supply

An offshore drilling platform, Manifa, Saudi Arabia, October 3, 2018.Bloomberg




When U.S. President Donald Trump asked Saudi Arabia this summer to raise oil production to compensate for lower crude exports from Iran, Riyadh swiftly told Washington it would do so.

But Saudi Arabia did not receive advance warning when Trump made a U-turn by offering generous waivers that are keeping more Iranian crude in the market instead of driving exports from Riyadh’s arch-rival down to zero, OPEC and industry sources say.

Angered by the U.S. move that has raised worries about oversupply, Saudi Arabia is now considering cutting output with OPEC and its allies by about 1.4 million barrels per day, or 1.5%, of global supply, sources told Reuters last week.

“The Saudis are very angry at Trump. They don’t trust him anymore and feel very strongly about a cut. They had no heads-up about the waivers,” said one senior source briefed on Saudi energy policies.


Washington has said the waivers are a temporary concession to allies that imported Iranian crude and might have struggled to find other supplies quickly when U.S. sanctions were imposed on November 4.

U.S. Secretary of State Mike Pompeo said on November 5 that cutting Iranian exports “to zero immediately” would have shocked the market. “I don’t want to lift oil prices,” he said.

A U.S. source with knowledge of the matter said: “The Saudis were going to be angry either way with the waivers – pre-briefed or even after the announcement.”

A U.S. State Department official said: “We don’t discuss diplomatic communications.”

The U.S. shift toward offering waivers adds to tension between the United States and Saudi Arabia as Washington pushes for Riyadh to shed full light on the murder of Saudi journalist Jamal Khashoggi in the Saudi Consulate in Turkey.

“The Saudis feel they were completely snookered by Trump,” said a second source briefed on Saudi oil thinking. “They did everything to raise supplies assuming Washington would push for very harsh Iranian sanctions. And they didn’t get any heads up from the U.S. that Iran will get softer sanctions.”

The Saudi Energy Ministry did not respond to a Reuters request for comment.

Since the summer, Riyadh has led the Organization of the Petroleum Exporting Countries, Russia and other producers to hike supplies by over 1 million bpd to keep a lid on prices as U.S. sanctions were imposed.

Brent oil had surged above $86 a barrel in October on tight supply worries, but prices have since slid to $66 on concerns about oversupply.

Trump had wanted lower oil prices before the U.S. midterm elections earlier this month. Washington gave waivers in November to eight buyers to purchase Iranian oil for 180 days. This was more waivers than were initially expected.

Saudi Crown Prince Mohammed bin Salman, a key Trump administration ally, wants prices at $80 or more for his economic reforms, sources familiar with Saudi thinking say.

https://www.haaretz.com/middle-east-news/saudi-arabia-upset-over-trump-s-iran-waivers-seeks-deep-oil-output-cut-1.6658698?v=00C71C86783A677BE63D903CEA34A537
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