The Saudi-US agreement on Sunday to stabilize oil markets and offset any potential supply shortages has angered Iran, which asked Organization of the Petroleum Exporting Countries (OPEC) member states to “refrain from unilateral actions.”
As Iran seeks to counter the US returning sanctions, which restrict its exports and reduce market share, Iranian Oil Minister Bijan Namdar Zangeneh wrote to UAE Minister of Energy Suhail Al Mazroui, urging him to remind OPEC members of sticking to the cut deal.
“Any increase in production by any member country that exceeds commitments set out in the (OPEC) resolution ... represents a breach of the agreement,” Zangeneh said.
On Saturday, the Custodian of the Two Holy Mosques King Salman bin Abdul Aziz and US President Donald Trump discussed in a telephone conversation the stability of oil markets to ensure the growth of international trade in light of the current global changes.
In Saturday tweet, Trump said he talked to King Salman about oil market conditions in light of unrest and disruption in Iran and Venezuela.
Venezuela is suffering from social and political unrest, as well as US sanctions, which could deprive the market of about 1.5 million barrels per day. Iran faces US and international sanctions that will also negatively reflect on the oil market if countries refuse to increase production.
On June 23, OPEC agreed with Russia and other oil-producing allies to increase production as of July. Saudi Arabia has pledged a substantial increase but has not specified any figures.
The White House said on Saturday that the Saudi monarch had told President Trump that the kingdom would increase oil production if necessary.
Saudi Arabia has led OPEC to increase production by about 1 million barrels per day (bpd) as of July 1, to compensate for any shortage of oil supplies as a result of faltering production in Venezuela and Iran. Russia, which is not a member of OPEC, on June 23, supported efforts to increase production.
Market supply was significantly affected by the 18-month-old output cut agreement between OPEC members and oil-producing countries, including Russia, which ended the global oil glut and raised crude prices.
The unprecedented agreement to cut oil supplies has raised crude prices from less than $ 30 a barrel in early 2016 to around $70.
Brent crude hit $79 a barrel last Friday. A Reuters poll showed prices would remain strong for the rest of the year due to supply disruption in countries including Libya and Venezuela.
