Algeria warns Saudi Arabia, Russia against increasing oil output

Randal Sanchez
July 3, 2018

The contract on Friday touched a high of $74.46, which was the highest since November 2014, rallying on concerns that US sanctions against Iran would remove a substantial volume of crude oil from world markets at a time of rising global demand.

"We will surely do something to thwart the USA rallying cry that Iranian oil (exports) must be stemmed", First Vice President Eshagh Jahangiri said in statements broadcast on state television.

"We want to defeat America's efforts ... to stop Iran's oil exports", he said.

President Donald Trump lashed out at OPEC with a warning to stop manipulating oil markets and piled pressure on close U.S. allies in an interview that aired on Sunday with a threat to sanction European companies that do business with Iran.

Trump is pressuring allies to stop buying Iranian oil as a tactic to make Iranian leaders negotiate a new nuclear deal, after he pulled out of the 2015 agreement two months ago.

Still, Iran vowed on Sunday to defeat U.S. efforts to block its oil exports and warned rival producer Saudi Arabia it would never take Tehran's "place" on the worldwide oil market.

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Hook's comments follow a turbulent week in the oil market that started last Tuesday when another State Department official called on buyers to stop importing Iranian crude by November 4. He also said he and senior Treasury Department would visit Gulf states "in the coming days".

But Saudi Arabia, OPEC's biggest producer, was keen to raise output to meet calls from Trump and major consumers such as India and China to help cool oil prices and avoid shortages, according to Saudi officials including Energy Minister Khalid al-Falih.

The collapsing economy has sparked new protests in Iran, with gunfire erupting Sunday morning as Iranian security forces confronted protesters demonstrating over water scarcity in the country's south.

While the administration's goal is to create maximum pressure on Iran "until the regime changes its destabilizing policies", it's unclear if that's where the sharp economic pain will lead, or whether it could embolden hardliners, inflame anti-American sentiments, or bring the country to some unknown chaos that could be worse.

Last week, some White House officials privately expressed displeasure with the State Department remarks because they were at odds with another Trump administration priority - stopping oil prices from rising too high ahead of the midterm elections.

"We are working to minimize disruptions to the global market but we are confident there is sufficient global spare oil production capacity", Brian Hook told reporters. The Saudis have not confirmed if that's the case. "Absolutely", the president responded when asked if the US would sanction European countries that do business with Iran.

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