Oil Tumbles After Al Jazeera Reports Saudis Agree To Trump Demand To Pump More Oil

With oil rising to the highest price since November 2014 less than an hour ago, with WTI hitting $75, oil suddenly tumbled on what appeared to be no news, prompting traders to ask if the US had sold even more oil from the SPR.

It turns out the reason is to be found in an article published moments ago by Al Jazeera, according to which the Saudis "have agreed to US demands to pump more oil", and which quoted the official Saudi Press Agency that Saudi Arabia's cabinet on Tuesday "endorsed the kindgdom's readiness to pump more oil to maintain market balance and stability."

"The kingdom is prepared to utilise its spare production capacity when necessary to deal with any future changes in the levels of supply and demand," a cabinet statement said, following a meeting chaired by King Salman.

Some more details from the Al Jazeera report:

US President Donald Trump on Saturday said Saudi Arabia's King Salman had agreed to his request to increase oil output "maybe up to" two million barrels. Trump said the agreement was reached after a phone call with the Saudi King about oil production but mentioned no specifics.

Both leaders also discussed "efforts by the oil-producing countries to compensate for any potential shortage in supplies," SPA reported.

Trump's claim comes after the Organization of the Petroleum Exporting Countries (OPEC), a grouping of oil-producing states that includes Saudi Arabia, already agreed to ramp up production by a million barrels a day at a meeting earlier this month.

In addition to pressing Saudi Arabia to pump as much as 2mmb/d more to an unprecedented 12mmb/d, an amount many doubt the Saudi can maintain for an extended period of time - think Tesla making Model 3s - the Trump administration has also been pushing countries to cut all imports of Iranian oil from November when the US re-imposes sanctions against Tehran, after Trump withdrew from a 2015 nuclear deal agreed between Iran and six major powers.

If the Saudis are indeed prepared to cave to Trump, it creates an existential threat to OPEC which may see Iran and other members quit immediately, if Riyadh has made a unilateral decision to pump more. 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.

As this point it is looking increasingly more likely that an emergency OPEC meeting is coming in the not too distant future.

Whether accurate or not, the Al Jazeera report has sent oil sliding, although it may be just the opportunity BTFDers have been waiting for.

Comments

Joe Trader DingleBarryObummer Tue, 07/03/2018 - 10:39 Permalink

as corrupt, anti-freedom, and tremendously intolerant islamic saudis are to other religions and atheists alike - primitive leaders like Trudeau should take note of the islamic saudi's likely manipulation of Trump.

You don't butt heads with Trump, you play by his rules and get rewarded with power & success.

Oil is one thing - but Trump needs to flex his power when it comes to all the mosques that the Saudis are building in Europe. Get them down where you want them Trump & twist their arms until every Saudi mosque in Europe is shut down!

In reply to by DingleBarryObummer

JimmyJones pods Tue, 07/03/2018 - 10:48 Permalink

They do, they have a ton of capacity.

This is in the Saudi's interest, anyway for them to turn the screws on Iran with little downside for them is a given. Make no mistake this isn't caving to Trump, this is the Saudi's serving their own interest that happen to be our interest at this time.

In reply to by pods

FBaggins Four Star Tue, 07/03/2018 - 12:32 Permalink

So what is really going on? Politics is like soccer in some respects. You have to keep your eye on the ball. Right now the main effort of the US is with respect to "negotiations" with Russia and the ball is Iran. The US-Brit bankster-oilster axis has already tried for years now to bankrupt Russia with SA reducing oil prices such that Russia was selling oil to its European and Chinese customers at less than cost. It was only a year ago with SA government financial resources so depleted that itself was facing bankruptcy that our axis backed off and prices were allowed to go up with the demand. Now, just as the most vociferous US advocate for war with Iran, Mr. Bolton, is sent to meet with the Russian leaders in Moscow to set the stage for the July 16 summit, Trump obviously needs more economic pressures to threaten Russia into abandoning its protection of Iran, and SA is ordered to increase its output, thus lowering the price. Putin will no doubt be aware that SA can only play the game so long. 

In reply to by Four Star

bshirley1968 Quantify Tue, 07/03/2018 - 11:12 Permalink

So you are saying that they have always hated one another (agreed), but the manipulation of oil markets just now became an issue?  SA would give up pricing to put the screws to Iran?  How does that not hurt SA just as much?

 

This could have something to do with it.

https://en.wikipedia.org/wiki/Energy_in_Iran#/media/File:Oil_Balance_Ir…

and 

https://upload.wikimedia.org/wikipedia/commons/f/f3/Oil_Balance_Saudi_A…

Notice the "consumption" increase with both.

In reply to by Quantify

veritas semper… JimmyJones Tue, 07/03/2018 - 11:32 Permalink

The Donald is trying to completely shut down the export/selling of the Iranian oil.

He threatened big European companies and most cave in.

Now he is asking the terrorist state of AL SAUD house, our good buddy in crime, to increase their oil production, to compensate for the Iranian oil.

There are a few problems with this:

-KSA does not have so much oil as before and as they claim

-Gandhar oil field is not so efficient anymore: they are pumping out more sea water than oil

-this is the main reason that the Yemeni genocide is happening : Yemen is on the same peninsula and has huge amounts of unexploited oil; KSA and UAE supported by US/UK and Israel( you know ,as usual ) started that war for this reason.

And the war is not going well:

                                     -UEA withdrew

                                     -The Houthis announced that they control the Hodeidah port

                                    -the Houthis announced that they killed an American colonel organizing the attack, Colonel Nicholas Petros was killed along with a group of mercenaries fighting for the Saudi regime in its war on Yemen.

                                    -the Houthis announced thay have captured another American officer conducting the KSA attack

How does this sound to the Donald gallery of fans?

This effort to destroy Iran is going to fail

Iran is going to sell its oil on the private market, and not in $.

There was a recent meeting in Paris, where members of the Donald administration participated + Giuliani ( who helped COVER UP the 9/11 crime) with MEK , the Iranian terrorist group that US trains in ALBANIA , and that US removed from the terrorist list.

They asked for regime change in Iran.

I'm pretty sure this will MAGA, don't you think?

In reply to by JimmyJones

bshirley1968 curbjob Tue, 07/03/2018 - 10:48 Permalink

".....oil suddenly tumbled on what appeared to be no news......."

"It turns out the reason is to be found in an article published moments ago by Al Jazeera......."

Pure market manipulation bullshit for the algos.  Saudi doesn't even have that kind of capacity to offer on short notice.....or maybe on any notice.

We all know how the Saudis like cheap oil prices.  They like taking fewer reserve notes for this most valuable energy resource on the planet.....that will render them a giant sand box once it is gone.  

Oil has gone up 10-12% in the last week alone.  This is just profit taking.....not Trump talking.

 

In reply to by curbjob

conraddobler Tue, 07/03/2018 - 10:40 Permalink

With all the machinations we see all around us it's so easy to get lulled into any one OR MORE of a universe sized set of narratives, none of which are completely congruent with actual reality.

Trump is truly amazing and I still to this day don't know exactly how this will play out, no one does, but I often find it very helpful to navigate by some very simple rules.

My rule one is that individual Liberty "both rights and responsibilities not just one or the other but both" is the highest social moral good.

My rule two is that we live on a planet that seems to have very few people who share this viewpoint at least to the degree I and some others do.

My rule three is that this kind of thinking is the only thing that will truly free mankind and it's not enough to hold those beliefs as an individual but it's also absolutely critical that enough other PROMINENT people do to maintain this in it's proper perspective and that unless said level is achieved, "whatever that may be" we are doomed to fall into any one of an infinite variants of tyranny.

I would say that tyranny is historically proven to be the easier of the two natural states of man to achieve.  Tyranny is a very easy way to make order out of chaos.  Individuals coming together to agree to disagree and still make order out of chaos is much more fragile and easily swamped for obvious reasons.

Therefore ONLY the steadfast determination to hold onto these ideals in the face of any and all forces to the contrary has any hope of ever freeing mankind.

I think it's that base of individual Liberty that has to be agreed upon and back to my original point all you have to do to see where we are is to see how many people PROMINENT PEOPLE properly value it to know how likely or unlikely it is that any society can achieve any degree of lasting individual Liberty.

It does not take a majority but it does take a core of leadership that can withstand any and all comers which will be legion and infinite in both number and duration.

Trump seems to be hammering on the right foes, of course it could end up just being another avenue to the tyranny of the month club, but in the end the leader does not matter.

It's the group at large who holds this view that has any hope of allowing individual liberty to flourish.

You have to remember to people who are no self actualized and who are incompetent this is a special kind of hell you are asking them to endure. 

They have probably established themselves in a social pecking order not based on competence but based on willingness to be a sniveling coward and attack others when called upon to do so and sanctioned from on high.

They are perfectly willing to do so viciously as this preserves their own self constructed rung on the tyranny ladder, and displacing that is like hitting a hornets nest with a stick.  

They are NOT going to take it lying down or calmly.

So when Trump goes up to the hornets nest he does so in full gear and with a smoke can or big stick, whatever works, thus some of what he is doing is going to seem well cheesy because it is, as in asking SA to pump more oil but if they do it, and it serves his aims long enough to finish what he started, then he's just playing the game that has to be played.

To actually win the game this has to end foundationally as an end to ALL the present levers of tyranny, that's the biggest ask in the history of asks given where we are now so it's going to look odd to say the least.

Keep your eye on the tyranny ball vs personal liberty ball, that's the only ball that matters.

Herdee Tue, 07/03/2018 - 10:41 Permalink

The high cost of transportation is killing the economy. It's bad for tourism. It'll help flatten out the yield curve. Trump's biggest problem is rising interest rates. Watch because the yield curve will invert by the fall.

FreeEarCandy Tue, 07/03/2018 - 10:49 Permalink

If I were president I wouldn't ask. I'd take 1/2 of their oil fields by force, as restitution for attacking us on 911. I'd also put the Israelis on notice for interfering with our elections.

George Bush League Tue, 07/03/2018 - 10:55 Permalink

What is the Ghawar oil field water cut? Do the Saudi's actually have the extra pumping capacity? Why are the Saudi's trying to take over Yemen, possibly to seize their oil reserves?  Is the delayed Saudi Aramco 2 Trillion Dollar IPO overpriced based on false valuations? Is it all Deep State smoke and mirrors? Inquiring minds would like to know.

remote George Bush League Tue, 07/03/2018 - 16:44 Permalink

The water cut varies and the data is not publicly available which should tell you something. However I do know the water cut has been stable for a couple of years as they are injecting CO2. SA could at best increase production by 150k in the near future and that would be a push and put structures at risk so it is unlikely. Given 18 months and massive investment they could possibly get this up to 500k and that is optimistic. All this talk about increasing production is simply rubbish it cant happen.

In reply to by George Bush League

To Hell In A H… Tue, 07/03/2018 - 11:03 Permalink

The Saudi's are dumb, vassal state cunts. How the fuck is it in their interest to have lower oil prices? Why pump more oil and thus depress prices? Uncle Scam have these sand-niggers by the balls. Why acquiesce?