Saudi Arabia and the UAE are committed to ensuring stability in the oil markets, the two countries said in response to US President Donald Trump’s decision to withdraw from the Iran nuclear deal.
Trump on Tuesday night announced that the US will pull out of the nuclear accord reached between six world powers and Iran in 2015 that lifted sanctions on the Islamic Republic in exchange for curbs on its nuclear programme.
In a statement posted on Saudi Press Agency, an official spokesman of the Saudi Arabia’s ministry of energy, industry and mineral resources assured that Saudi Arabia remains committed to supporting the stability of oil markets for the benefit of producers and consumers alike, and for sustaining growth in the global economy.
The spokesman also added that the kingdom would work with major producers within and outside Opec (organisation of the petroleum exporting countries) as well as major consumers to mitigate the impact of any potential supply shortages.
Saudi Arabia, along with Iran and a number of other oil producers are cutting production by about 1.8 million barrels per day to prop up oil prices and rebalance oil markets.
The agreement, which came into effect early last year, will continue till the end of 2018.
In similar comments, UAE Energy minister Suhail Al Mazrouei tweeted late on Tuesday that Opec is a non-political organisation and their goal is to ensure the stability of oil markets for an efficient, economic and regular supply of petroleum to consumers, a steady income to producers and a fair return on capital for those investing in the petroleum industry.
“Working collaboratively with our partners, our joint efforts to rebalance the oil market and bring investment back into our industry are progressing well. Collectively, we will continue to focus on these goals,” Al Mazrouei said.
Oil prices went up by more than three per cent on Wednesday to reach three and half-year highs, after US president Donald Trump announced the decision to exit the deal.
Brent, the global benchmark, was trading at $76.66 per barrel, up by 2.42 per cent at 3:16pm UAE time and US crude West Texas Intermediate (WTI) at $70.78 per barrel, up by 2.49 per cent.
Analysts are bullish about oil prices going up further due to current stand on Iran by the US government.
“There are upside risks of Brent rising above $80 per barrel and WTI above $75 per barrel in the near term, given that markets haven’t fully priced in yet how the “hard exit” Trump stance will channel through into the willingness of Iran’s crude importing countries to comply with the US restrictions,” Ehsan Khoman, head of research and strategist for Mena in MUFG Bank Limited, told Gulf News.
He also said that while the unilateral US re-imposition on Iranian crude will reduce its exports, the size and scope still hinges on Iran’s importing countries’ adherence to conform with the sanctions.
This comes on top of further upside price risks due to potential supply losses from geopolitical uncertainty stemming from Venezuela, as well as in Iraq where there are parliamentary elections on May 20 and May 12 respectively.
Source: Gulf News