Saudi Arabia has enough spare capacity to cover potential disruptions and will continue to use it, the country’s Energy minister Khalid Al-Falih said Monday during an industry event in India amid market concern about the consequences of any potential U.S. sanction.
At the same time, Saudi Arabia has expressed “its total rejection of any threats” following U.S. President Donald Trump’s comments that the kingdom could face severe punishment if there is any proof that the Saudi government was behind the killing of a journalist.
Saudi Arabia has invested “tens of billions of dollars to build the spare capacity which has been two to three million barrels over the years … out of a sense of responsibility” and it will use it to cover supply disruptions in case a major producer falters, he said during an IHS Markit event.
In turn, Saudi Arabia hoped that nations worldwide “will respect and acknowledge” what it has done to be able to cover any supply disruption and bring stability to markets, he added.
The language and offer to bring stability to markets was in sharp contrast to an editorial by Turki Aldakhil, the general manager of Al Arabiya, a news channel set up two decades ago by members of the Saudi Arabian royal family and which claims access to “information circulating within decision making-circles within the kingdom.”
Aldakhil said Sunday in the opinion piece that the talk among Saudi Arabia’s decision makers included “more than 30 potential measures,” including some related to oil production that could allegedly lead to prices soaring way beyond any historic high.
The latest data from OPEC — which it warned was not the official but provided by secondary sources — showed that Saudi Arabia in September increased production by 108,000 barrels per day from August to 10.5 million barrels per day. This happened as the biggest output losses were 150,000 barrels per day by Iran and 42,000 barrels per day by Venezuela in that same month.
Saudi Arabia currently produces more than ten percent of the world’s oil production and demand, currently balanced at about nearly 100 million barrels per day, according to the International Energy Agency.
Concerns about the impact of sanctions against Iran as well as production disruptions in Venezuela had kept the market volatile in recent weeks.
Brent crude future trading on Monday showed volatility. At around 9.45 a.m. EST futures traded at $80.22, down 0.3 percent from the opening. Less than half an hour earlier they had reached $81.03 per barrel, or up 0.8 percent.