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Saudi Arabia’s Energy Minister Khalid al-Falih met with the U.S. Special Representative for Iran, Brian Hook, on Wednesday, a day before OPEC is meeting to discuss new production cuts to rebalance the market, Reuters reported, quoting sources familiar with the meeting.
While the topic of the Saudi-U.S. meeting was not immediately clear, it’s probably safe to assume that the energy minister of OPEC’s de facto leader and the U.S. official for Iran discussed the current and future impact of the U.S. sanctions on Iran on the global oil market.
According to S&P Global Platts, the meeting between al-Falih and Hook, which neither side confirmed or agreed to comment, may have been held to exchange views on Saudi Arabia’s position at Thursday’s OPEC meeting and what level of production the cartel and allies might need to keep in order to factor in more losses of Iranian oil supply.
Over the past month, U.S. President Donald Trump has expressed hopes that OPEC would not cut production, then sent out a thank-you-Saudi Arabia tweet and urged for even lower oil prices, while basically declining to blame Saudi Arabia and its Crown Prince Mohammed bin Salman for the murder of Jamal Khashoggi.
After the U.S. granted waivers to eight of Iran’s key oil buyers to continue importing Iranian oil at reduced volumes at least until early May 2019, Saudi Arabia and other OPEC members, as well as their key partner in the non-OPEC group, Russia, are now considering a new cut and a U-turn from their pump-to-compensate-for-Iran policy that started in June.
The U.S. pledge to bring Iran’s oil exports down to zero did not materialize, and the market was left oversupplied, with oil prices plunging some 30 percent from the four-year-highs reached in early October.
Last week, Hook said that a lot more Iranian oil would be coming off the market soon.
“We have taken over 1 million bpd off Iran’s export list and many more barrels will be coming off very soon,” the diplomat said at a briefing.
In November, Iran’s oil exports dropped to some 1.25 million bpd, down 1.12 million bpd since May, a Platts analysis of data from shipping sources and provisional tanker tracking showed. With eight countries securing waivers until early May, Iran’s oil exports may rise from the November levels in the coming months, according to analysts.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.