President Donald Trump said Saturday that he had received assurances from King Salman of Saudi Arabia that the kingdom will increase oil production, "maybe up to 2,000,000 barrels" in response to turmoil in Iran and Venezuela. Saudi Arabia acknowledged the call took place, but mentioned no production targets. A little over an hour later, the state-run Saudi Press Agency reported on the call, but offered few details.
"During the call, the two leaders stressed the need to make efforts to maintain the stability of oil markets and the growth of the global economy," the Saudi Press Agency statement said.
It added that there also was an understanding that oil-producing countries would need "to compensate for any potential shortage of supplies." It did not elaborate.
Expert Commentary:
"If Trump's comments are accurate, it could immediately knock $2 or $3 off the price of a barrel of oil." - Phil Flynn. He went on to say, "it's unlikely that a Saudi increase could sustain itself as demand spikes, leading prices to rise by wintertime."
"We'll need more oil down the road and there'll be nowhere to get it," said Flynn, of the Price Futures Group. "This leaves the world in kind of a vulnerable state."
"Trump is trying to exert maximum pressure on Iran while at the same time not upsetting potential U.S. midterm voters with higher gas prices", said Antoine Halff, a Columbia University researcher and former chief oil analyst for the International Energy Agency. Talk is cheap and cannot produce more oil: "The Trump support base is probably the part of the U.S. electorate that will be the most sensitive to an increase in U.S. gasoline prices," Halff said.
"The Trump administration has been counting on Saudi Arabia and other OPEC members to supply enough oil to offset the lost Iranian exports and prevent oil prices from rising sharply. But broadcasting its requests on Twitter with a number that stretches credibility opens a new chapter in U.S.-Saudi relations. The Saudis are used to U.S. requests for oil," Halff said. "They're not used to this kind of public messaging. I think the difficulty for them is to distinguish what is a real ask from what is public posturing."
MY TAKE - Let me be CRYSTAL CLEAR:
There is ZERO chance that Saudi Arabia can increase their production by 2 million barrels per day between now and year-end. There is even less chance they would maintain their production at 12 million barrels per day. A high percentage of their production comes from waterfloods, which must be carefully managed.