Saudi Arabia has increased crude production “significantly” to a near-record level amid intense pressure from U.S. President Donald Trump to reduce prices.
OPEC’s largest producer is currently pumping about 10.7 million barrels a day, Energy Minister Khalid Al-Falih told reporters in Moscow on Wednesday. That’s just shy of the record set in November 2016, before the kingdom and allies including Russia agreed to cut production to boost prices.
“We’re meeting every single demand for barrels,” Al-Falih said. “We’ve increased production quite significantly. We just have to be responsive to demand” because some would say the market is currently oversupplied, he said.
Saudi Arabia appears to be bowing again to pressure from Trump. Since the kingdom rebuffed his calls last month for a rapid production increase to offset the impact of sanctions on Iran, the president has amplified his rhetoric. At a rally in Mississippi on Tuesday, he said the Middle Eastern country wouldn’t last two weeks without U.S. military protection. Al-Falih is trying to strike a delicate balance between appeasing Trump and not oversupplying the market just as the global economy shows signs of weakness due to the emerging markets crisis and U.S.-China trade war. The oil market has reacted anxiously to the lack of a clear signal that the Organization of Petroleum Exporting Countries and its allies would fill the gap left by Iran. Since the group’s September meeting in Algiers, Brent crude has jumped $6 to about $85 a barrel, a four-year high. At the Russian Energy Week conference in Moscow on Wednesday, Al-Falih has the opportunity to recalibrate this message, if he wishes.Market Reaction
Crude futures fell, dropping 12 cents to $84.68 a barrel in London and 7 cents to $75.16 in New York.