Fatih Birol, the Executive Director of the International Energy Agency (IEA), is not worried about Saudi Arabia retaliating with reduced oil supply in response to potential sanctions after the killing of dissident Saudi journalist Jamal Khashoggi.
Saudi Arabia admitted last week that Khashoggi is dead, but said that the reason was a quarrel and a brawl at the Saudi consulate in Istanbul, Turkey, where the journalist was last seen entering on October 2.
Speaking to Reuters on Monday, IEA’s Birol said, when asked about the oil market concerns over Saudi Arabia possibly retaliating in response to potential sanctions by the global powers over the killing of the journalist that “There are many geopolitical, non-energy related issues, which could also have further impact on the oil markets.”
Saudi Arabia—OPEC’s biggest producer and de facto leader—is unlikely to reduce oil production, Birol told Reuters, but asked for “common sense” amid geopolitical events that could affect the oil market.
“There’s a strong challenge for the key producers to increase production and comfort the markets. I appeal to all the producers and consumers to have common sense in the very difficult months we are entering,” Birol told Reuters on the sidelines of a conference in Japan. Related: Goldman Sachs: Oil Unlikely To Reach $100
Although Birol isn’t worried about the Saudis cutting oil supply, he said that he was concerned about the market because of the crumbling oil production in Venezuela and falling supply from Iran, while demand growth is still strong.
In its Oil Market Report from October 12, the IEA welcomed OPEC’s efforts to boost supply. The Paris-based agency, however, noted that with Iran’s exports likely to fall by significantly more than the 800,000 bpd so far, and the “ever-present threat of supply disruptions in Libya and a collapse in Venezuela, we cannot be complacent and the market is clearly signaling its concerns that more supply might be needed.”
In an interview with Russian news agency TASS published on Monday, Saudi Energy Minister Khalid Al-Falih said “There is no intention” when asked if there would be a repetition of the 1973 oil embargo amid the international outcry over the killing of the Saudi journalist.
By Tsvetana Paraskova for Oilprice.com
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