United States issues warning to Russian Federation about helping Iran escape upcoming oil sanctions

United States issues warning to Russian Federation about helping Iran escape upcoming oil sanctions

Troy Powers
October 24, 2018

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.

The kingdom, which produces more than a tenth of global supplies, had vowed on Monday not to withhold its output as a political weapon amid the worldwide backlash over the murder of journalist Jamal Khashoggi.

They said he died in a fistfight and that a number of Saudi government employees have been arrested in connection with the death.

United States sanctions on Iran's oil sector start on Nov 4 and analysts believe anything up to 1.5 million bpd in supply could be at risk.

Top U.S. lawmakers turned their ire on Saudi Crown Prince Mohammed bin Salman on Sunday and said they believed he ordered the killing of Khashoggi, although the administration of U.S. President Donald Trump maintained a more cautious stance.

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

Peter Kiernan, lead energy analyst at the Economist Intelligence Unit in Singapore, said a Saudi cutback would be self-defeating as "Saudi Arabia would. risk losing market share to other exporters while losing its reputation as a stable actor in the market".

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Iran's minister of petroleum says Saudi Arabia has submitted to U.S. pressure, violating an OPEC agreement reached in June not to raise its production.

The Saudis have deep pockets, thanks to the strong worldwide oil price, and they are courted by many around the world for their wealth. Shipping brokerage Eastport said crude prices were "expected to decline in coming months, as rising production in the USA offsets increasing global demand".

Falih said oil producers will continue to monitor supply and demand in the market, especially with the Iran sanctions about to kick in, and would be ready to act if needed. We work to stabilize global markets and facilitate global economic growth. Riyadh has refrained from using oil as a direct weapon since then.

"If 3 million barrels per day disappears, we can not cover this volume". The US is expected to become the largest oil producer in the world next year, according to the International Energy Agency.

"We have sanctions on Iran, and nobody has a clue what Iranians' exports will be".

The oil market has been concerned that Saudi Arabia might cut crude supply in retaliation for potential sanctions over the killing of journalist Jamal Khashoggi. 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.