U.S. 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 that the two leaders had spoken by telephone, but mentioned no production targets.
Trump wrote on Twitter that he had asked the king in a phone call to boost oil production "to make up the difference ... Prices to [sic] high! He has agreed!"
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 statement said.
It said there was an understanding that oil-producing countries would need "to compensate for any potential shortage of supplies," but it did not elaborate.
Iran's OPEC governor, Hossein Kazempour Ardebili, accused the United States and Saudi Arabia of trying to push up oil prices and said both countries are acting against the foundation of OPEC.
"If this happens, [it] means Trump is asking Saudi Arabia to walk [away] from OPEC," he told Reuters.
"The market will go up to $100 I am sure, as Saudi Arabia said they will plan an increase for July. ... This was managed between the two to rob the pocket of rest of the world," he said.
In a statement issued Saturday night, the White House did not specify that Saudi Arabia would increase production but said, "King Salman affirmed that the kingdom maintains a 2 million barrel per day spare capacity, which it will prudently use if and when necessary to ensure market balance and stability, and in coordination with its producer partners, to respond to any eventuality."
Oil prices have edged higher as the Trump administration has pushed allies to end all purchases of oil from Iran following the U.S. pullout from the 2015 nuclear deal between Iran and world powers. Prices also have risen with ongoing unrest in Venezuela and fighting in Libya over control of that country's oil infrastructure.
Last week, members of the Organization of the Petroleum Exporting Countries cartel led by Saudi Arabia and non-cartel members agreed to pump 1 million barrels more crude oil per day, a move that should help contain the recent rise in global energy prices. However, summer months in the U.S. usually lead to increased demand for oil, pushing up the price of gasoline in a midterm election year.
Oil analyst Phil Flynn, of the Price Futures Group, said that if Trump's comments are accurate, this could immediately knock $2 or $3 off a barrel of oil. But he said it is unlikely that this decrease could sustain itself as demand rises, leading prices to rise by wintertime.
"We'll need more oil down the road and there'll be nowhere to get it. This leaves the world in kind of a vulnerable state," Flynn said.
Other analysts were more doubtful about immediate effects.
Trump appears to be trying to "talk the market down," said Lawrence Goldstein, director of the Energy Policy Research Foundation. He questioned whether Trump's words would do anything to reverse the effects on the market of declining Iranian oil production. He also noted it always takes at least two months before a change in shipping commitments affects the market.
Trump's comments came Saturday, when global financial markets were closed. Brent crude stood at $79.42 a barrel, while U.S. benchmark crude was at $74.15.
Saudi Arabia currently produces some 10 million barrels of crude oil a day. Its record is 10.72 million barrels a day. Trump's tweet offered no timeframe for the additional 2 million barrels, and did not say whether that meant per day or per month.
However, Saudi Aramco CEO Amin Nasser told journalists in India on Monday that the state oil company has spare capacity of 2 million barrels of oil a day. This was after Saudi Energy Minister Khalid al-Falih said the kingdom would honor the OPEC decision to stick to a 1 million-barrel increase.
"Saudi Arabia obviously can deliver as much as the market would need, but we're going to be respectful of the 1 million-barrel cap – and at the same time be respectful of allocating some of that to countries that deliver it," al-Falih said.
The administration has threatened close allies such as South Korea with sanctions if they do not cut off Iranian imports by early November. South Korea accounted for 14% of Iran's oil exports last year, according to the U.S. Energy Department.
China is the largest importer of Iranian oil with 24%, followed by India with 18%, Turkey at 9% and Italy at 7%.
The State Department has said it expects the "vast majority" of countries will comply with the U.S. request.
State Department officials said this week the United States is prepared to work with countries on a case-by-case basis to help them reduce imports of Iranian oil and suggested some exemptions were possible.
