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Despite its supposed promise to the United States to ramp up its oil production in the face of a tightening oil market, Saudi Arabia does not have the capability to ramp up its oil production to the tune of 2 million barrels per day, according to Venezuela’s Ambassador to Iran, Gregorio Gonzalez, in a statement to MEHR News Agency on Friday.
Saudi Arabia had assured President Donald Trump in early July that it could raise oil production if necessary, stating that it had sufficient spare capacity to bring online an additional 2 million barrels per day. The Kingdom’s promise followed a series of Tweets by President Trump that chastised the cartel for underproducing and manipulating oil prices.
Saudi Arabia’s promise to President Trump to lift production was not well received by all members of the cartel, particularly Iran. Today, Venezuela chimed in on Saudi Arabia’s planned production hike as well.
“It definitely violates the [OPEC] rules, but the problem is they are not able at all to produce that much oil; Saudi Arabia pledges to OPEC, but does not have the potential and capacity to keep this promise,” Gonzalez said today.
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A disgruntled Gonzalez went on to say that Saudi Arabia can only produce as much oil as they do because they have fewer “problems with the United States”—a sentiment that is not surprising coming from Venezuela, who, along with Iran, has been the target of US sanctions.
Whether Venezuela truly has direct knowledge of Saudi Arabia’s capacity is unknown, but the question of Saudi Arabia’s excess capacity—if any at all—has left many analysts and traders wondering just how much oil Saudi Arabia can actually produce, worried that OPEC will not be able to offset the production loss of Venezuela and Iran.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.