Crude prices plunge as Saudi Arabia reassures market on supply

Posted October 24, 2018

Mr Falih added that Saudi Arabia will raise oil output to 11 million barrels per day from 10.7 million. A lower price will help.

Benchmark Brent crude oil futures rose 45 cents on the day to US$80.23 a barrel by 0900 GMT, while United States crude futures rose 31 cents to US$69.43 a barrel.

"My role as the energy minister is to implement my government's constructive and responsible role and stabilizing the world's energy markets accordingly, contributing to the global economic development", Falih said.

Oil in NY slid more than 5% in Tuesday's session as Saudi Arabia pledged to meet any supply shortfalls and as a risk-off sentiment spread throughout global markets.

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"The request that America made to Saudi Arabia and other OPEC countries is to be sure that if there is any loss of supply from Iran, that we will supply that".

Earlier today, Saudi Arabia's Energy Minister Khalid Al-Falih said that it was possible for their output to increase by 1-2 million barrels per day and added that they were ready to meet the market demand if Iran's oil exports were to shrink due to the USA sanctions.

On Tuesday, Zangeneh reiterated Iran's position that neither Saudi Arabia nor Russian Federation can replace Iranian oil.

Saudi Energy Minister Khalid al-Falih told a conference in Riyadh yesterday the oil market was in a "good place" and he hoped oil producers would sign a deal in December to extend co-operation to monitor and stabilise the market.

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"Tariff concerns, renewed weakening in Chinese equities, emerging market worries and the ongoing investigations of the Saudi participation in the Khashoggi murder are combining to force major liquidation out of the equity space that is easily flowing into the oil complex", said Jim Ritterbusch, president of Ritterbusch and Associates in a note. But he added that with Iranian sanctions coming into full force next month, there were no guarantee oil prices would not go higher.

He insisted earlier this week that OPEC's largest producer would continue to separate oil and politics, pledging sufficient supply amid market anxiety following the killing of journalist Jamal Khashoggi in the Saudi consulate in Istanbul.

There are limits to the kingdom's ability to respond, Al-Falih said.

The Saudi minister expected demand for oil, which now stands at around 100 million bpd, to rise to 120 million bpd over the next three decades. "So we have to use oil reserves", he said.

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USA crude inventories probably rose 3.7 million barrels last week, according to a Bloomberg survey of analysts. The 13 nations who've been members of the group throughout the period pumped 32.4 million barrels a day last month, about 740,000 barrels a day less than the level in December 2016, according to data compiled by Bloomberg.