Saudi Arabia Has No Plans to Repeat 1973 Oil Crisis
(Bloomberg) -- Saudi Arabia has no intention of using its oil wealth as a political tool in the controversy over the killing of journalist Jamal Khashoggi, and the kingdom plans to boost crude output again soon.
"For decades we used our oil policy as a responsible economic tool and isolated it from politics," Energy Minister Khalid Al-Falih said in an interview with Russia’s TASS news agency published on Monday. "So let’s hope that the world would deal with the political crisis, including the one with a Saudi citizen in Turkey, with wisdom," he said.
Falih’s comments come just days after Saudi Arabia said Khashoggi, a critic of Crown Prince Mohammed bin Salman, was killed in the country’s consulate in Istanbul. While the official report won praise from U.S. President Donald Trump, many politicians and leaders in America and Europe questioned the official explanation that he was accidentally killed in an altercation. That contradicts details leaked by Turkish officials saying the journalist was murdered.
The incident has damaged the kingdom’s image as a future investment hub, with global business leaders from Goldman Sachs Group Inc. to Uber Technologies Inc. distancing themselves from Prince Mohammed and scrapping plans to attend his business forum this week.
Production Promise
Last week, Saudi Arabia vowed to retaliate against any punitive measures linked to Khashoggi’s fate, fueling concerns of oil price hikes. Al-Falih said there’s no intention of repeating the 1973 oil embargo, in which the kingdom and several regional allies squeezed supplies to the U.S. and Europe in retaliation for their support for Israel.
Saudi Arabia is ready to raise its output to 11 million barrels a day "in the near future" and has the ability to lift production as high as 12 million barrels a day if the market requires it, Al-Falih said. The world needs to show its appreciation of the efforts and multi-billion dollar Saudi investment that made this possible, he added.
There are limits to the kingdom’s ability to respond, Al-Falih said. If the supply gap created by disruption in Libya, Nigeria, Venezuela -- as well as U.S. sanctions against Iran -- were to grow as large as 3 million barrels a day, Saudi Arabia would need to tap its oil reserves, he said.
Joint work between the Organization of Petroleum Exporting Countries and non-OPEC oil producers needs to continue on a long-term basis, Al-Falih said. He expects the cooperation agreement, initially signed in late 2016, to be extended in December, at a meeting in Vienna. The deal "will allow us to intervene to rebalance the market in any appropriate time from January onward", he said.
After agreeing in late 2016 to cut production to eliminate a supply glut and boost prices, many OPEC members and allies including Russia are now increasing output to offset disruptions in Venezuela and Iran. It’s still too early to say what strategy the group will adopt in 2019 given current uncertainties, said Al-Falih.
"If the supply is too long, we should be able to cut,” Al-Falih said. "If supply is short, we have to be able to respond."
To contact the reporter on this story: Dina Khrennikova in Moscow at dkhrennikova@bloomberg.net To contact the editors responsible for this story: James Herron at jherron9@bloomberg.net Helen Robertson
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- How Likely Is an All-Out War in the Middle East Involving the USA?
- Rooftop Solar Now 4th Largest Source of Electricity in Australia
- US Confirms Reimposition of Oil Sanctions against Venezuela
- EU, Industry Players Ink Charter to Meet Solar Energy Targets
- Analyst Says USA Influence on Middle East Seems to be Fading
- Russian Ships to Remain Banned from US Ports
- Brazil Court Reinstates Petrobras Chair to Divided Board
- EIB Lends $425.7 Million for Thuringia's Grid Upgrades
- Var Energi Confirms Oil Discovery in Ringhorne
- Seatrium, Shell Strengthen Floating Production Systems Collaboration
- An Already Bad Situation in the Red Sea Just Got Worse
- What's Next for Oil? Analysts Weigh In After Iran's Attack
- USA Regional Banks Dramatically Step Up Loans to Oil and Gas
- EIA Raises WTI Oil Price Forecasts
- How Likely Is an All-Out War in the Middle East Involving the USA?
- Venezuela Authorities Arrest Two Senior Energy Officials
- Namibia Expects FID on Potential Major Oil Discovery by Yearend
- Oil Markets Were Already Positioned for Iran Attack
- Is The Iran Nuclear Deal Revival Project Dead?
- Petrobras Chairman Suspended
- Oil and Gas Executives Predict WTI Oil Price
- An Already Bad Situation in the Red Sea Just Got Worse
- New China Climate Chief Says Fossil Fuels Must Keep a Role
- Oil and Gas Execs Reveal Where They See Henry Hub Price Heading
- Equinor Makes Discovery in North Sea
- Macquarie Strategists Warn of Large Oil Price Correction
- DOI Announces Proposal for Second GOM Offshore Wind Auction
- Standard Chartered Reiterates $94 Brent Call
- Chevron, Hess Confident Embattled Merger Will Close Mid-2024
- Analysts Flag 'Remarkable Feature' of 2024 Oil Price Rally