The international nuclear agreement with Iran could not be the only agreement that has been decoded by US President Donald Trump. On Monday, Saudi Arabian Energy Minister Khalid Al-Falih reiterated his 19659003 mantra that the production of OPEC and its allies must continue. Within 48 hours, the kingdom had increased the prospect of increasing production.
Between the two statements came Trump's decision to abolish the nuclear deal with Iran and impose sanctions on the world's fifth-largest oil exporter.
Iranian sanctions could completely change the OPEC meeting in June, "said Amrita Sen, chief oil analyst at London-based consulting firm Energy Aspects Ltd." It is no longer about the expansion of production cuts, but about when production can be gradually increased. " Over the past 16 months, the Organization of Petroleum Exporting Countries, Russia and other allies have curtailed production to eliminate global oversupply and have largely achieved this goal, but the Saudis – keen on higher prices – have insisted The curbs should further reduce oil supplies.
This policy could stall after Trump's Iranian sanctions, although it is still unclear how much he intends to limit Iran's oil supply, but most analysts predict a decline
When international sanctions on Iran lasted from 2012 to 2015, around 1 million barrels a day were withdrawn from the market, and this time America's allies in Europe want to keep the nuclear concord alive and Embargo Estimates assume "low impact" expected by Barclays Plc w up to a potential loss of more than 50 percent of the FGE's forecast 2.7 million barrels of daily deliveries.
Reduced inflows from Iran would exacerbate the escalating losses suffered by OPEC members Venezuela has continued to cut oil supplies while demand remains strong, according to Goldman Sachs Group Inc. Oil futures rose to a three-year high of $ 77.65 a barrel on Thursday at 8:10 am in London.
This poses a dilemma for the Saudis: Should they continue to focus on higher prices and keep production stable? Or should they offer political and economic support to Trump and take away market share from their regional rivals by increasing production to fill the gap?
A statement that the kingdom published a few hours after Trump's announcement seemed to give the answer. Saudi Arabia will "mitigate the impact of supply shortages," it said. Kuwait later gave a similar assurance.
"The signal of this is: the Iranian oil will be lost, we will replace it," said Fereidun Fesharaki, founder and chairman of FGE, in a Bloomberg television interview  Increasing Production to Compensation Iran and curbing rising prices would prevent damage to the global economy and fuel demand. With US fuel costs rising, the move could also placate President Trump, who pleaded with OPEC last month for "artificially high" prices.
There are also risks. If supply is increased too high or without coordination with other manufacturers such as Russia, markets can be flooded and prices lowered. The alliance that they founded in 2016 could break up into mutual rivalry and mistrust
"OPEC needs to take some balancing act," said Bassam Fattouh, director of the Oxford Institute for Energy Studies. "They want to preserve the deal they've worked very hard on," he said, pointing to the group's historic production cuts.
In a sign that Riyadh knows the political sensibility of oil production increase, Al-Falih said in a post on Twitter on Wednesday that he is in "close contact" with other OPEC Nations, Russia and the US to ensure "market stability".
Much depends on Russia. The Kremlin will have to balance its alliance with Iran in the Syrian conflict against the new alliance with Saudi Arabia and the temptation to promote production of Ural crude oil, which could replace Iran's oilseed barrels in Europe.
If the latter argument outweighs, then President Trump The decision could finally be made available to OPEC and Russia, which had only six months in 2016 with an exit strategy.
"It will be interesting to see if there is a clear language in the next OPEC meeting statement that signals a resolution of the agreement at the end of the year," said Helima Croft, chief commodity strategist at RBC Capital Markets LLC.