On Saturday morning, president Trump triumphantly tweeted that following a phone call with the Saudi King, OPEC's largest producer had conceded and in defiance of the OPEC agreement reached just last week, had agreed to pump as much as 2 million barrels of oil extra in an attempt to lower prices:
“Just spoke to King Salman of Saudi Arabia and explained to him that, because of the turmoil & disfunction in Iran and Venezuela, I am asking that Saudi Arabia increase oil production, maybe up to 2,000,000 barrels, to make up the difference ... Prices to high! He has agreed!”
However, subsequent remarks by both the White House and Saudi Arabia via Reuters curbed Trump's enthusiasm. In a statement issued by the White House late on Saturday, it said that the White House said that the Saudi king had promised President Donald Trump that he can raise oil production if needed and the country has 2 million barrels per day of spare capacity.
"King Salman affirmed that the Kingdom maintains a two million barrel per day spare capacity, which it will prudently use if and when necessary to ensure market balance."
No guarantees, no promises, just a vague reference to what many believe is peak, or even beyond, Saudi oil production.
As a reminder, Trump's comments came just one week after Saudi Arabia along with the rest of OPEC nations including Russia had agreed on June 22 to boost production by a combined 700,000 to 1 million barrels a day, so any 2 million bpd-increase would be at least double market expectations, prompting a furious backlash from the likes of Iran. According to a Bloomberg report last week, Saudi Arabia would shoulder the bulk of this excess production, boosting output by a little under 1mmb/d to a record high 10.8mmb/d from the current 10mmb/d pace.
Separately, a source familiar with Saudi Arabia’s production plans told Reuters earlier in the week of the kingdom’s intention to increase output by 200,000 bpd this month.
Both a far cry from the 12 million barrels in Saudi production envisioned by Trump's tweet, which is urgently need to keep oil prices from surging at a time when the Trump administration is cracking down on Iran oil exports and demanding US allies cut their Iranian oil purchases to zero by November 4.
Meanwhile, Reuters reports that Saudi state media also downplayed Trump's rhetoric, and reported that "during the call the Saudi king and Trump emphasized the need to preserve oil market stability and efforts of oil-producing countries to compensate for any potential shortage."More importantly, the Saudi statement did not mention any intention by Saudi Arabia to raise production by 2 million bpd.
To be sure, there is speculation whether Saudi Arabia can even produce as much daily output as Trump suggested: while the kingdom has a...