US President Donald Trump said in a tweet on Saturday that Saudi Arabia's King Salman had agreed to his request to increase oil production "maybe up to 2,000,000 barrels" to offset production from Iran and Venezuela.
President Donald Trump has asked Saudi Arabia's king to increase oil production to make up for a shortfall from Iran and Venezuela.
Concern of a potential lower supply and thus higher prices have been spurred by the economic crisis in Venezuela and USA sanctions on Iran (the White House is pushing countries to stop imports of Iranian oil after it withdrew from the Obama-era nuclear deal with Tehran).
Saudi Arabia is the world's biggest oil exporter and has usually kept at least 1.5 million to two million barrels per day of spare capacity, according to the United States Energy Information Administration.
Saudi Arabia was producing around 10 million barrels of crude a day in May, according to OPEC. But broadcasting its requests on Twitter with a number that stretches credibility opens a new chapter in U.S. -Saudi relations, Halff said. "He has agreed!" A little over an hour later, the state-run Saudi Press Agency acknowledged the call, but offered few details.
It added that there also was an understanding that oil-producing countries would need "to compensate for any potential shortage of supplies".
USA crude production slipped 2,000 barrels per day (bpd) to 10.467 million bpd in April from the highest on record in March, the Energy Information Administration (EIA) said.
Iran opposed any changes to the original production-cut deal at a time when its oil industry is facing renewed sanctions over Trump's decision to quit the worldwide nuclear deal with Tehran. However, summer months in the USA usually lead to increased demand for oil, pushing up the price of gasoline in a midterm election year. It did not mention the two million barrel increase. Its all-time record is 10.72m barrels a day.
Speaking after three days of protests, Supreme leader Ayatollah Ali Khamenei said the US sanctions were aimed at turning Iranians against their government.
Oil analysts said OPEC producers may not be able to fully supply the market if Iranian oil is cut from the market. "They're not used to this kind of public messaging".
"It is a strategic move [from Saudi Arabia] to side with Trump at this point and I think what we have seen so far is a combination of an oil price war as well as an indirect diplomatic confrontation between the Iranians and other OPEC members", Mohammed Cherkaoui, professor of conflict resolution at George Mason University, told AL Jazeera from Washington, DC.
The administration has threatened close allies such as South Korea with sanctions if they do not cut off Iranian imports by early November. Imports of Iranian crude oil by major buyers in Asia rose in May to the highest in eight months.
The State Department has said it expects the "vast majority" of countries will comply with the U.S. request.