Saudi Arabia pledged to expand oil capacity if needed -White House

Donald Trump

In a tweet on Saturday, Trump said King Salman bin Abdulaziz Al Saud had agreed to his request to boost production by "maybe up to 2,000,000 barrels".

Mr Trump tweeted that he had asked Saudi ruler King Salman to raise oil output by up to two million barrels a day. However, the price action on Friday suggests that buyers are still coming in and aggressively willing to chase this market higher.

The Trump administration has been counting on Saudi Arabia and other OPEC members to supply enough oil to offset the lost Iranian exports and prevent oil prices from rising sharply.

Russia, Iraq, the UAE and Kuwait jointly have another million barrels, so there is spare production of 3 million barrels a day.

Saudi Arabia has a maximum sustainable capacity of 12 million bpd, but it has never tested that level of production. It would far surpass the previous high of 10.72 bpd from November 2016.

Helping driving prices higher is President Trump and his administration who has been warning countries no to go on using crude from Iran (China will ignore than).

However, Riyadh did not reference anything related to a two-million-barrel increase, leading to questions about whether Trump's tweet was an exaggeration, wishful thinking, a business strategy, or yet another "Trumpism".

"This is a situation where USA shale oil production itself has dropped in the past few months and that drop in the inventory has pushed oil prices up", Jordan said. Brent crude stood at $79.42 a barrel, while U.S. benchmark crude was at $74.15.

Trump is concerned about the hike in gasoline prices in the United States, where a gallon costs an average of $2.85, which is 63 cents more than a year ago, according to estimates of the American Automobile Association (AAA).

The news agency also reported Saturday that Saudi Energy Minister Khalid al-Falih said the kingdom will increase output by hundreds of thousands of barrels, with exact figures to be determined later.

The Opec oil producers' group agreed to increase output, as did Russian Federation, but this failed to reassure markets.

"We'll need more oil down the road and there'll be nowhere to get it", said Flynn, of the Price Futures Group.

On Saturday, Iranian Supreme Leader Ayatollah Ali Khamenei said the U.S. was trying to drive a wedge between Iranians and their government using "economic pressure".

"If we take 2 million barrels of oil off the market, what is going to be left in the tank?" Russian Federation could also add as much as 400,000 barrels a day, analysts say. "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. When Trump withdrew and reimposed sanctions, that meant Iranian exports would come under pressure. He questioned whether Trump's words would do anything to reverse the effects on the market of declining Iranian oil production.

Related news: