Saudi Arabia hails Trump’s decision to quit Iran nuclear deal – and announces it will step up oil production to prevent supply shortages as prices rise 2%
- Iran is expected to cut off its oil supply after the President’s decision yesterday
- The withdrawal of the US from the deal means Iran will suffer harsh sanctions
- Saudi Arabia said it could step up production to meet the expected shortfall
- Several Middle East states including Bahrain and the UAE also praised the deal
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Saudi Arabia has said it will ramp up its oil production to compensate for the drop in supply following Donald Trump’s rejection of the Iran nuclear deal.
The world’s largest oil exporter, has said it will take all necessary measures to prevent supply shortages as Iran is expected to retaliate with its own sanctions.
‘The kingdom will work with major oil producers within and outside OPEC, and with major consumers as well to limit the impact of any shortages in supplies,’ the Saudi energy ministry said in a statement late Tuesday.
Saudi Arabia’s assurance came just hours after US President Donald Trump announced the United States was withdrawing from the landmark nuclear deal between world powers and Iran.
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Refineries in Saudi Arabia (pictured) are capable of compensating for the shortfall in supply if Iran decides to halt production
Iranian refineries (pictured) currently account for around 2.5 million barrels per day of crude oil
Donald Trump announced on Tuesday that the US would be pulling out of the Iran nuclear deal agreed by the Obama administration
Trump also reinstated US sanctions which could curtail Iran’s ability to export oil, its mainstay for public revenues.
Saudi Arabia also called upon the international community and parties in the Iran nuclear agreement to ‘heed Mr Trump’s call for a Middle East free of nuclear weapons and other weapons of mass destruction.’
Before international sanctions were lifted following the nuclear deal in late 2015, Iran’s crude exports stood at just one million barrels per day, mostly to Asia and European countries.
That figure has since soared to 2.5 million bpd.
Saudi Arabia currently pumps around 10 million bpd, but has capacity of around 12 million bpd – a surplus of two million bpd.
‘The kingdom of Saudi Arabia is committed to support the stability of the global oil markets to serve the interests of both producers and consumers and also the sustainability of global economic growth,’ the ministry statement said.
Iranian politicians burning pieces of paper with the US flag on after the announcement on Tuesday
Iranian President Hassan Rouhani said that Iran could reinstate the nuclear programme after the decision
Saudi Deputy Crown Prince and Defence Minister Mohammed bin Salman meeting President Trump in Washington DC on March 4 2017
Major oil producers from OPEC and non-OPEC members including Russia, the world’s top producer, are linked to a deal until the end of the year to cut output by 1.8 million bpd to support prices.
Oil prices made key gains after Trump’s announcement with Brent crude rising 2.4 percent to over $76.5 a barrel and US crude trading above $70 early Wednesday.
The UAE and Bahrain also backed Trump’s decision – with the UAE’s Minister of State for Foreign Affairs Anwar Gargash tweeting: ‘Iran’s rhetoric & aggressive regional actions were the background to a flawed deal.
‘The veneer of Tehran’s compliance contradicted its bellicose policies. President Trump’s decision is the correct one’.
Mr Trump said in his announcement that the United States consulted with our friends from across the Middle East. ‘We are unified in our understanding of the threat and in our conviction that Iran must never acquire a nuclear weapon,’ he said.
Iran nuclear deal – what happens next?
Trump’s withdrawal from the nuclear deal abruptly restores harsh sanctions on Iran, an any companies which trades with it, meaning major companies in the U.S. and Europe could be hurt, too.
The sanctions seek to punish Iran for its nuclear program by limiting its ability to sell oil or do business overseas, affecting a wide range of Iranian economic sectors and individuals.
Treasury Secretary Steven Mnuchin said that licenses held by Boeing and its European competitor Airbus to sell billions of dollars in commercial jetliners to Iran will be revoked.
New rules: US President Donald Trump, seen here shaking hands with National Security Advisor John Bolton, will impose sanctions on Iran, and companies doing business with Iran, immediately
Certain exemptions are to be negotiated, but Mnuchin refused to discuss what products might qualify.
He said the sanctions will sharply curtail sales of oil by Iran, which is currently the world’s fifth largest oil producer.
Mnuchin said he didn’t expect oil prices to rise sharply, forecasting that other producers will step up production.
The White House administration said it would re-impose sanctions on Iran immediately but allow grace periods for businesses to wind down activity.
Companies and banks doing business with Iran will have to scramble to extricate themselves or run afoul of the U.S. government.
In Iran, many are deeply concerned about how Trump’s decision could affect the already struggling economy.
In Tehran, Rouhani sought to calm nerves, smiling as he appeared at a petroleum expo. He didn’t name Trump directly, but emphasized that Iran continued to seek ‘engagement with the world.’
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