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On Monday, in a decision that shook oil market players around the world, the Trump administration announced that it would not renew or extend the exemptions they had granted to eight countries, allowing them to continue buying Iranian oil in small quantities despite US sanctions. The initial six-month grace period granted by these "significant reduction exceptions" expires on May 1 and Washington requires that countries previously allowed to continue to buy Iranian crude immediately and unilaterally cut Tehran. For many, this decision was a shock, and many oil-dependent countries in Iran are now trying to figure out what that means for the future.
A major group, however, seems surprisingly unperturbed. Even after Trump mentioned by name the Organization of the Petroleum Exporting Countries, suggesting that they will use to fill the gaps in the supply once Tehran has taken over. As a result, OPEC members remained extremely vocal on the issue, saying that they would not do it. rush to increase production.
On Wednesday, Saudi Energy Minister Khalid al-Falih said the kingdom would take no immediate action to increase oil production, adding that it was responding to market fundamentals as opposed to pricing and that the country, the world's largest oil exporter, will remain focused on maintaining a balanced global oil market ahead of all other concerns. "In fact, stocks continue to rise despite what is happening in Venezuela and despite tougher sanctions against Iran. I do not see the need to do anything immediately, "said Falih, quoted by CNBC in Riyadh. "Our intention is to stay within the limits of our voluntary production (OPEC)." Mr Falih added that his country "would be listening to our customers, especially those who have benefited from waivers and those whose waivers have been withdrawn".
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This does not mean that Saudi Arabia believes that the end of US sanctions exemptions will not affect global crude supply and the global oil market. "We think that there will be an increase in real demand but we will certainly not anticipate and increase production," said al-Falih.
Saudi Arabia is not the only OPEC country to adopt a reserved, unhurried public position aloud. A day after the announcement of the lifting of the waiver by the Trump government, Kuwaiti Oil Minister Khaled Al Fadhel told reporters that OPEC would not take any decision on this issue until meeting of OPEC members in Jeddah, Saudi Arabia, in May. to thoroughly review the prices.
That being said, the end of Iran's crude waivers will be a major topic of discussion at the May 19 meeting. "I'm sure the subject of US sanctions will be a hot topic to discuss [at the Joint Ministerial Monitoring Committee meeting in Jeddah in May]Fadhel told reporters in Tokyo.Fadhel explained: "A decision will only be made after the OPEC production policy review in the light of the announcement of on Monday. [oil] price and how it influences prices "adding that" Kuwait, as an OPEC member country and founder of OPEC, is still seeking to stabilize [oil] "Is Kuwait willing to increase its own oil production to meet any new demand left in the absence of Iranian oil?" Said Fadhel, urging: "As Minister of Petroleum, we have not discussed this issue from now on ".
OPEC has scheduled another meeting in Vienna, Austria, on 25 June, during which participating countries will discuss whether or not to extend their prior agreement to reduce by 1.2 million b the production of OPEC producers, which will continue after the end of June. The current agreement, due to expire at the end of June, allows for an exception to production cuts for Iran, as well as for Venezuela and Libya. A follow-up meeting with non-OPEC signatories will take place the following day.
By Haley Zaremba for Oilprice.com
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