What’s The Story?

Saudi Arabia’s Crown Prince is shocked that anyone would believe that he would have anything to do with the death of journalist Jamal Khashoggi, who just happened to leave. I mean, was attacked by rogue elements, I mean getting into a fist fight at the Saudi consulate in Istanbul. The Saudi Crown prince, of course, knows nothing about it other than for sure it was not his fault. In the meantime, the U.S. is stressing the importance of the U.S.-Saudi relationship as the world and the world oil market is heading into winter with one of the tightest supply situations in years and ahead of U.S. sanctions on Iran. The Global oil market can’t afford to lose more oil as we are seeing spare oil capacity fall to the lowest level in modern history.

In fact, according to Reuters, OPEC is already having a hard time keeping oil production where it is. Internal documents from OPEC show that they may be close to being already tapped out. Reuters says that OPEC is struggling to add barrels to the market after agreeing in June to increase output, as an increase in Saudi Arabia was offset by declines in Iran, Venezuela, and Angola.

This comes as Saudi Arabia’s Minister of Energy Khalid Al-Falih claims that Saudi Arabia can pump more oil, but he is not sure if anyone can. He said in an interview with Tass that “Saudi Arabia now in October produces oil at the level of 10.7 Mln bpd. I can say that we can go up, if necessary, to 12 Mln bpd. This I can assure. But if 3 Mln bpd disappears, we cannot cover this volume. So, we must use oil reserves. But it is very important for the world to support Saudi Arabia, because it is the only country that invest heavily in spare capacities.”

“For now, we in Saudi Arabia have 1.3 Mln bpd of spare capacity, UAE has assured me they have over 200,000 bpd remaining. But we do not know what is going to happen in other countries. We know Kazakhstan plans to increase production with Kashagan and Tengizoilfields., Brazil is expecting to increase production. And U.S. shale could bring additional volume of oil. So, it may happen that we may not need to use spare capacities. But if you have other countries to decline in addition to the full application of Iran sanctions, then we will be pulling all spare capacities.”