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Saudi Arabia is raising its crude oil production to meet market demand after the U.S. sanction waivers for all Iranian customers ended last week, according to the U.S. Secretary of Energy Rick Perry.
“Our partners, if you will, our allies, Saudi Arabia for instance, they are increasing their production to meet these needs relative to the Iran sanctions,” Secretary Perry told CNBC in an interview on Tuesday.
“Clearly, the smart message for all our friends and allies around the world is ‘don’t do business with these people’,” Secretary Perry said, referring to the U.S. sanctions on Iran and the U.S. expectations of how American allies should view Iran and doing business with Tehran right now.
Secretary Perry is the latest top official within the U.S. Administration to voice confidence that Saudi Arabia will be stepping in to fill in the gap in oil supply that Iran is expected to leave as of this month.
While analysts are trying to assess how low Iran’s exports could drop, the Saudis are publicly saying that they would not be rushing to ramp up production before seeing actual barrels off the market.
Saudi Arabia issued a measured response to the end of the U.S. waivers, vowing to work toward “market stability”, but stopping short of announcing any immediate production increase, as it did last year when it boosted oil production ahead of the U.S. sanctions waivers decision, only to see exemptions for eight Iranian buyers, an oversupplied market, and crashing oil prices.
“In the next few weeks, the Kingdom will be consulting closely with other producing countries and key oil consuming nations to ensure a well-balanced and stable oil market, for the benefits of producers and consumers as well as the stability of the world economy,” Saudi Energy Minister Khalid Al-Falih said in a statement on the day in which the U.S. announced the end of all waivers.
Last week, reports emerged that the Saudis might pump more oil in June but this does not necessarily mean they would raise crude exports because the increased production would likely go for power generation as the summer begins in the Kingdom.
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.