OPEC unfazed by potential lack of supply
In a decision calling oil market partners around the world, the Trump administration announced on Monday that they would not renew or extend oil releases they had given to eight counties so they could continue to buy Iranian oil in reduced quantities despite US sanctions . The original six-month grace period given by these "significant reduction exceptions" ends on May 1, and Washington requires the nations previously allowed to continue buying Iranian raw immediately and unilaterally cutting Tehran off. For many, the decision came as a shock, and many nations dependent on Iranian oil are now scrambling to determine exactly what it means for the future.
However, a large group seems surprisingly unruffled. Even after Trump mentioned the organization of the petroleum exporting countries by name, suggesting that they would go up to fill out any supply gap when Tehran is lined up, OPEC members themselves have been very measured by the problem and said they will not [1[ads1]9659002] Wednesday, Saudi Arabia's energy minister Khalid al-Falih said the kingdom will not take any immediate action to increase oil production and add that they respond to market fundamentals as opposed to pricing, and that nation, the world's top oil exporter, will remain focused on maintaining a balanced global oil market across all other concerns. "Inventory continues to rise despite what's happening in Venezuela and despite tightening sanctions against Iran. I don't see the need to do anything immediately," Falih was quoted by CNBC in Riyadh as saying. "Our intention is to be within our voluntary production limit for OPEC." Falih added that his country would "be responsive to our customers, especially those who have been exempt and those who have been deprived."
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This does not say that Saudi Arabia believes that the end of US sanctions deviations will not affect global crude supply and the global oil market as a whole. "We believe that there will be an inflated demand in real demand, but certainly we will not be perishable and increase production," al-Falih said.
Saudi Arabia is not the only OPEC country that grows with an unprecedented, reserved audience attitude. Tuesday, one day after the Trump administration's disposal command, Kuwait's oil minister Khaled Al Fadhel told reporters that OPEC would be reluctant to make any decisions on the case after OPEC members met in Jeddah, Saudi Arabia in May, and had the opportunity to Carefully assess prices.
That being said, the end of Iranian raw deviations will be a major topic of discussion at the May 19 meeting. "I'm sure the topic of US sanctions will be a hot topic to be discussed [at the Joint Ministerial Monitoring Committee meeting in Jeddah in May]" told Fadhel journalists in Tokyo. When the pressure to comment on OPEC will revise its production policy in light of Monday's announcement, Fadhel expands, "A decision will only be made after the review of [oil] prices and how it affects prices" adds that "Kuwait as a country, a member of OPEC and a founder of OPEC, we always seek the stabilization of [oil] prices worldwide. "If Kuwait is ready to cease its own oil production to meet any new demand for Iranian oil absence, Fadhel pulled off an urgency , and just said, "As an oil minister, we have not discussed this problem as of now."
OPEC has another meeting scheduled in Vienna, Austria on 25 June, when the participating countries will discuss whether they will extend their previous agreement on to reduce the OPEC manufacturer's production by 1.2 million b / d to continue past the end of June. The current agreement, which expires at the end of June, allows exceptions to production cuts for Iran, Venezuela and Libya. A follow-up meeting with non-OPEC signatories will be held the next day.
By Haley Zaremba for Oilprice.com
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