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ALGER, Algeria – Saudi Arabia lacks crude oil, people familiar with the issue said, which could lead to higher oil prices.
After suffering pressure from the Trump administration on rising oil prices, Saudi Arabia will meet in Algiers on Sunday to reassure the oil markets that it will be able to fill the oil shortages. November.
But Saudi oil giant Saudi Arabian Oil Co., known as Aramco, tells potential buyers that its most-prized crude will be out of stock in October after underestimating demand before Iran's sanctions. And in the longer term, officials believe that Aramco would not have the capacity to meet future demand if Iran does not deliver more oil, according to people familiar with the issue.
The shortage could push prices above $ 80 a barrel, potentially putting a strain on American consumers who will decide whether President Trump's Republican Party will retain control of both houses of Congress in November.
With the combination of Iran's sanctions and Saudi Arabia's supply limitations, "a barrel of oil will bring in between $ 90 and $ 100 per barrel," said an oil trader. "Iran will not be the only one to suffer. There is going to be a boomerang effect with rising gas prices in the United States.
A potential buyer said he was informed this week and, as a result, supplies were fully allocated for the month of October. The buyer states that he has been offered the less popular medium and heavy oil from Aramco.
Saudi Arabia says it has increased oil output by 400,000 barrels a day in the last two months after being pressured by the United States. The country currently produces about 10.4 million barrels a day. A day after oil prices hit $ 80 a barrel, Trump said Middle Eastern producers "continue to push for higher and higher oil prices" in a tweet on Thursday morning.
Trump has already said that King Salman of Saudi Arabia told him that the kingdom could raise its output to 12 million barrels a day.
Such a level would mean that the UK – the only producer able to adjust its production at will – could cover a large part of current Iranian exports by 1.9 million barrels a day if the US achieved its goal of banning sales. of all Iranian oil.
Domestically, some Saudi officials believe that it was not possible to maintain such a level, according to people familiar. Producing "$ 11 million is already a stump, even for a few months," said a Saudi official.
Spokespersons for the Saudi Ministry of Energy and Aramco did not respond to requests for comment.
Another person informed of Saudi production capacity said the kingdom could pump $ 11 million for six months only. A senior US official said Washington believed Saudi Arabia could not reach 12 million barrels a day.
Saudi officials say they are comfortable with current price levels, but they fear a further rise will reduce demand and lead to price collapse.
Some relief to Saudi Arabia's supply problem could come from closed oil fields for three years following a dispute between the Kingdom and Kuwait. Until recently, both parties had little incentive to resume production in a saturated market.
But both countries are finalizing a resolution of differences in environmental permits and building permits, according to people familiar with the subject. As a result, Saudi Arabia and Kuwait are preparing for the eventual resumption of the installation of 300,000 barrels a day in the Khafji field early next year, and probably as early as December, they said.
– Sarah McFarlane contributed to this article.
Write to Summer Said at [email protected] and Benoit Faucon at [email protected]
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