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Trump, Saudi's King Salman to boost production to battle rising oil prices

02 July 2018

The two leaders stressed the importance of maintaining oil-market stability, according to the report.

The overt pressure brought by Trump on Saudi Arabia is unusual, but the kingdom has been actively urging the president to withdraw from the worldwide agreement that placed restrictions on Iran's nuclear program.

That has led Democrats to lay the blame on the White House, highlighting Trump's decision to pull the United States out of the Iran nuclear deal as a factor in the tightening global oil supply. Since then, the two governments have announced hundreds of billions of dollars worth of contracts, with Trump openly bragging about how many U.S. jobs the Saudis were helping to create.

At the OPEC meeting last week, Iran's oil minister said that the cartel should not be influenced by Trump and should deal with supply and demand. These mainly include Saudi Arabia, Russia, the UAE, Kuwait, Iraq and Kazakhstan.

OPEC agreed with Russian Federation and other oil-producing allies this month to raise output from July by about 1 million bpd. Saudi Energy Minister Khalid Al-Falih indicated the group's action would add almost one million barrels a day to the market.

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Oil prices hit $80 a barrel this year for the first time since 2014, prompting consumers like the United States to raise concerns. USA prices for retail gasoline at the moment have reached levels that haven't been matched in the past four years.

Trump has repeatedly lashed out at Opec on Twitter in recent months, piling pressure on Riyadh, a major ally, to boost output as he hopes for lower pump prices before midterm congressional elections in November.

The Saudi government said on its official website that the two leaders had spoken about oil production, but avoided suggesting any specific deal had been struck.

President Donald Trump says he has received assurances from King Salman of Saudi Arabia that the kingdom will increase oil production, "maybe up to 2,000,000 barrels", in response to turmoil in Iran and Venezuela.

"Once you get above that level, we are into uncharted territory", said David Fyfe, chief economist at the Gunvor Group, a major trading house. "While Saudi Arabia has the capacity in theory, it takes time and money to bring these barrels online, up to one year", said Amrita Sen of consultancy Energy Aspects. Iran now exports around 2.4 million barrels a day of crude of which a million barrels or so could be at risk.

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Other analysts were more doubtful about immediate effects.

Iran's OPEC governor, Hossein Kazempour Ardebili, accused the United States and Saudi Arabia of trying to push up oil prices and said both countries are acting against the foundation of OPEC.

"They bring to bear economic pressure to separate the nation from the system. but six US presidents before him tried this and had to give up", Khamenei was quoted as saying on Saturday by his website Khamenei.ir, referring to Trump.

The curbs were meant to help drain a global oil glut, a goal that has largely been achieved, though supply disruptions are now adding pressure to prices.

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Trump, Saudi's King Salman to boost production to battle rising oil prices