Saudi Arabia can be so-called swing producer in oil market

Commentary Materials 1 November 2018 08:57 (UTC +04:00)

Baku, Azerbaijan, Nov. 1

By Leman Zeynalova – Trend:

Saudi strategy in the oil markets is dictated by a number of forces including the changing geopolitical environment brought about by the requirements to cut off Iran from the international market place through sanction, Dr. Theodore Karasik, Senior Advisor Gulf State Analytics Washington DC, told Trend.

He noted that if Saudi is required to boost production in order to maintain pressure on Iran this will be the case.

"Russia, is cognizant of requirements on the global market that allows for Moscow to play a key role in conjunction with Saudi Arabia. Moscow of course gets the pleasure of playing all sides in the energy market as the Kremlin and its energy subsidiaries pursue grander plans to use energy prices to Russia’s advantage," said the expert.

Karasik noted that at key junctures, Saudi and Russia policy work hand in hand. "Yet on the Iran sanction front, there appears to be a case by case basis emerging in terms of "exceptions" which may complicate a blanket sanctions action."

He believes that although China and the rest of East Asia have dropped their import of Iranian oil further and further, the 100 percent mark may not be met.

"Saudi Arabia can be the so-called swing producer in this market especially in terms of the continuing of illicit trade which needs to be halted by maritime interdiction," he said.

In regards to US sanctions against Saudi Arabia as a result of the Khoshoggi issue and its aftermath, the expert believes that there is a high possible of actions taken against individuals through US Congressional action but in terms of energy, there appears to be a reassessment ongoing about US energy policy and the Saudi oil industry.

"It is safe to say that perhaps a healthy strategic reassessment may benefit both Washington and Riyadh to make the marketplace healthier depending on the length of US sanctions that may come into play later in the year or in early 2019," he concluded.

Saudi Arabia’s Energy Minister Khalid A. Al-Falih earlier said that the country’s daily oil output for October stands at 10.7 million barrels. He noted that in the case of necessity, this figure can reach 12 million barrels per day.

The minister pointed out that the uncertainty with regard to world oil supply still continues. The sanctions to be imposed on Iran starting from Nov.4 and the supply cuts from some other countries also contribute to this uncertainly, according to Al-Falih. Therefore, the minister believes it is not ruled out that oil prices can surpass $100 per barrel in 2019.


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