Markets

Saudi Arabia, UAE Stick to Agreement on Oil Output Cut

Saudi Arabia, UAE Stick to Agreement on Oil Output Cut

The UAE's energy minister said there was no need to relax the deal by the OPEC+ group of oil exporting countries to cut output by 1.2 million barrels per day to support prices.

"We see that (oil) inventories are rising and supplies are plenty", Saudi Energy Minister Khalid al-Falih told reporters at the start of a key meeting for oil producers in Jeddah.

He said OPEC's job "is not done yet" and that there was no need to alter the agreement in the meantime.

Oil prices edged up on Tuesday on escalating tensions between the United States and Iran and on signs that producer club OPEC will continue withholding supply this year.

The warning comes amid simmering tensions between the United States and Iran.

The deal has helped drive up oil prices, which had been hit by a glut of United States shale hitting the market.

The current tensions are rooted in Trump's decision previous year to withdraw the USA from the 2015 nuclear accord between Iran and world powers and impose wide-reaching sanctions, including on Iranian oil exports that are crucial to its economy.

Last week, the U.S. made a decision to deploy to the Persian Gulf the amphibious assault ship USS Arlington, Patriot missiles, the aircraft carrier USS Abraham Lincoln and assorted warplanes, including bombers, after claiming that it had detected unspecified "indications" of Iranian plans to attack U.S. forces in the Middle East.

Iran said on Tuesday that it would resist US pressure, declining further talks under current circumstances.

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In December 2018, the group agreed in Vienna to work to jointly reduce crude oil production by 1.2 million barrels per day from the beginning of January, initially setting a six-month time frame, a move that has driven gains for oil prices this year.

Venezuelan oil minister Manuel Quevedo, who holds Opec presidency denounced what he called "US siege of its oil industry" which he blamed for the loss of production of around 600,000 bpd since the end of past year.

Signs that Asian economies were already being hit by the trade conflict helped to boost the US dollar to a four-week high, making crude more expensive for much of the world.

Iranian Foreign Minister, Javad Zarif, had dismissed the possibility of war erupting, saying Tehran did not want conflict and no country had the "illusion it can confront Iran".

Last year, prior to bringing Bolton into the administration as one of his top advisers, Trump withdrew the United States from the Iran nuclear deal. No claims of responsibility had been made, but the USA was taking the incident "very seriously".

The drone strike on oil pumping stations, which Riyadh said did not disrupt output or exports, was claimed by the Houthis, who have been battling a Saudi-led military coalition in a war in Yemen since 2015.

Prior to that, the minister reported another incident near the UAE in the vicinity of the Fujairah port as four vessels were targeted in a "sabotage attack". "While both are eyeing Iran's market share, they are on the opposing sides of the conflict around Iran".

"Although it has not affected our supplies, such acts of terrorism are deplorable", al-Falih said.