Published: Tue, October 23, 2018
Economy | By

Minister: Saudi Arabia in ‘crisis’ after Khashoggi murder

Minister: Saudi Arabia in ‘crisis’ after Khashoggi murder

Oil prices dipped on Tuesday after Saudi Arabia pledged to play a "responsible role" in energy markets, although sentiment remained nervous in the run-up to US sanctions against Iran's crude exports that start next month.

Khalid al-Falih said if the kingdom has to use its oil reserves if it wants to cover 3 million barrels per day of oil loss from Iran.

Brent crude futures LCOc1 dropped 2.8 percent, or $2.27, to $77.56 a barrel by 11:21 a.m. EDT (1521 GMT) after plunging to $77.50, the lowest since September 18.

USA sanctions on Iran's oil sector start on Nov 4 and analysts believe anything up to 1.5 million bpd in supply could be at risk.

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.

Traders have been underpinning prices since late last week on the notion that the Saudi's would cut crude supply in retaliation for potential sanctions against it over its involvement and attempted cover-up of the Khashoggi killing.

"We will decide if there are any disruptions from supply, especially with the Iran sanctions looming", Falih said.

Meanwhile, Russia's oil production is now 150,000 bpd higher than the October 2016 level, the baseline for the global oil production deal, TASS news agency quoted Energy Minister Alexander Novak as saying.

There has been concern that just as markets tighten on the back of the USA sanctions against Iran, Saudi Arabia could cut crude supply in retaliation for potential sanctions against it over the Khashoggi killing.

The outlook for demand next year, meanwhile, is deteriorating.

The stock market correction of roughly 1.6% is due to a culmination of factors, including unfavorable earnings reports from Caterpillar and 3M, poor performing Asian markets, interest rate hikes, and the U.S./China trade dispute.

South Korea's crude imports from Iran fell to zero in September, data from state-run Korea National Oil Corp showed.

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.

Oil demand to reach 120mln b/d in 30 years.

The Schork Report editor Stephen Schork on US oil production and why he believes that the market has adjusted to the Iran sanctions.

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