Saudi Arabia is monitoring the impact of the United States withdrawal from the Iran nuclear deal on Crude Oil supplies and is ready to offset any potential shortage, but it will not act alone to fill in the gap, an OPEC source familiar with the Kingdom's Crude Oil thinking said on Wednesday.
Under the nuclear deal, formally known as the Joint Comprehensive Plan of Action (JCPOA), the United States committed to ease a series of sanctions on Iran and has done so under a string of "waivers" that effectively suspend them.
Iran, which pumps about 4 percent of the world's oil, exports about 450,000 barrels per day (bpd) to Europe and around 1.8 million bpd to Asia. Iran still tests missiles whose only goal is to deliver nuclear warheads, and it funds the Middle East's most murderous and destabilizing elements, supporting Bashar Assad's Syrian regime, Hezbollah's terrorist operations and Hamas' violence in Israel.
"The two leaders looked forward to the summit which will take place between President Trump and Kim Jong Un in Singapore", the spokesman said. "But I expect the price of North Sea Brent to be closer to $80 than $70 a barrel", Seele said in an interview.
Last year, Trump bragged about "record-low" gas prices, saying that he wanted to see them "even lower".
During a Thursday press conference with his visiting German counterpart, Heiko Maas, Russian Foreign Minister Sergei Lavrov said Washington can not unilaterally reinstate those anti-Iran sanctions, which were lifted by the United Nations.
No one knows exactly how high prices will go.
Trump on 8 May announced the USA decision to withdraw from what he views as a "defective" pact, noting that the sanctions to be re-imposed are targeted at critical sectors of Iran's economy, such as energy, petrochemical and financial sectors.
Saudi Arabia has threatened to build a nuclear weapon if Iran pursued such a weapon of mass destruction, in the wake of a USA exit from a historic nuclear deal.
Saudi Arabia pledged on Tuesday to "work with major producers within and outside OPEC" to "mitigate the impact" of supply shortages. Heightened geopolitical fears in the Middle East often raise prices.
Both the Houthi movement and Iran deny any military con nection-but are politically aligned in regional affairs. It's not clear when an attack could come, nor what form it could take. Donald Trump launches a scenario that will significantly tighten the oil market in the second half of the year and the next.
Lavrov, meanwhile, praised Iran's "balanced reaction" to Trump's move, adding that in this situation "the haste would probably be unproductive".
The benchmark contract was up $1.80 a barrel, or 2.4 percent, at $76.65 by 1240 GMT. While it is still uncertain how far he intends to curtail Iranian oil shipments, most analysts predict a cutback.
The breaking of US-Iran nuclear deal will have pressure on India and India will have to worry over the impact of Countering America's Adversaries Through Sanctions Act (CATSA) on its arms and oil trade with Russian Federation. China, Iran's largest customer, may be especially reluctant to cut Iran off because of the trade tensions between Beijing and Washington. $90 or $100 oil "may again be in the cards", Fesharaki wrote.
Strong demand and production cuts from OPEC and Russian Federation tightened global oil supplies prior to the Iran decision. For one, China can switch to other suppliers to replace Iran quite easily, particularly Russian Federation. How long Saudi Arabia would be able to maintain such a policy is unclear. Saudi Arabia signaled it could make up lost supplies, and Goldman Sachs Group Inc. said there's a chance prices may exceed its forecast. "Do we accept that the United States is the economic gendarme of the planet?
We need to assess first the impact if there is any, in terms of disruption, in terms of a reduction of Iran's production", the OPEC source said. USA oil production is skyrocketing, though output in the oil-rich Permian Basin is being limited by pipeline shortages that could last until late 2019.