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Iran Crisis Changes OPEC Equation as Saudis Signal Supply Boost

The international nuclear agreement with Iran might not be the only deal U.S. President Donald Trump has unraveled.

On Monday, Saudi Arabian Energy Minister Khalid al-Falih was repeating his mantra that production cuts by OPEC and its allies must keep going. Within 48 hours, the kingdom had raised the prospect of increasing output.

Between the two pronouncements came Trump’s decision to scrap the nuclear accord with Iran, re-imposing sanctions on the world’s fifth-biggest oil exporter.

“The Iranian sanctions may change the OPEC June meeting completely,” said Amrita Sen, chief oil analyst at consultants Energy Aspects Ltd. in London. “It’s no longer about extending the production cuts, but rather about when to start raising output gradually.”

For the past 16 months, the Organization of Petroleum Exporting Countries, Russia and other allies have been constraining output to eliminate a global glut. They’ve largely achieved that goal, but the Saudis — keen for higher prices — have insisted the curbs should continue to drive oil stockpiles even lower.

Saudi Dilemma

That policy may falter in the wake of Trump’s Iran sanctions. While it’s still uncertain how far he intends to curtail Iranian oil shipments, most analysts predict a cutback.

Source: More Top Stories – Google News