TEHRAN (Press Shia) – A day before US President Donald Trump withdrew from the Iran nuclear deal, one of his senior officials phoned Saudi Arabia to ask the world’s largest oil exporter to help keep prices stable if the decision disrupted supply.
Three sources familiar with the matter said a senior US administration official had called Saudi Crown Prince Mohammad bin Salman before Trump’s announcement to make sure Washington could count on Riyadh. One of the sources said the call took place on May 7. The other two did not specify a date for the call.
Washington was worried that the sanctions would curb deliveries from Iran and push oil prices up, the sources said, according to Reuters.
A White House spokesperson declined to comment on whether a call took place. A senior Saudi official did not confirm the call but said, “We were made aware of the decision on the JCPOA (Joint Comprehensive Plan of Action) before the announcement. … We always have conversations with the US about the stability of the oil market.”
The Saudi statement in May threatened to undermine a deal between OPEC and its allies led by Russia to curb output by about 1.8 million barrels per day, starting from January 2017, to reduce a supply glut and boost prices. The deal is due to expire at the end of 2018.
OPEC will meet on June 22 and needs a consensus of all members to officially change its output policy. Iran’s Oil Minister Bijan Zangeneh said last week he did not agree on the potential need to increase global oil supplies.
An OPEC source familiar with Saudi thinking said that Riyadh and Washington had discussed their oil policies before the US announcement on Iran. “You need to work with your partners in dealing with any potential effect on supply" that OPEC source said. The sudden shift in Riyadh’s public position came as a surprise to its (Persian) Gulf allies, who coordinate OPEC policies closely.
Some Persian Gulf countries were “upset that there was no prior consultation with them,” a separate source said.
They felt Riyadh had come under pressure from Washington and they had not been consulted before public comments by Saudi Energy Minister Khalid al-Falih.
Falih traveled to Russia’s economic forum in St. Petersburg last month and said the kingdom was prepared to gradually ease oil output curbs to calm consumers’ worries.
The shift has also irked some producers outside the Persian Gulf.
“Some people felt they were not properly consulted before the comments in St. Petersburg,” a second OPEC source said.
A third OPEC source said it would be against the OPEC charter to raise output just because Washington had requested it.
“For some OPEC members, this is too much,” the source said.
US reliance on Saudi crude imports has decreased in recent years, in part as domestic shale output has risen, but Saudi Arabia remains an important source of US supply. The United States imported 748,000 bpd from Saudi Arabia in March 2018, having reached a post-1970s peak of more than 2 million bpd during 2003, according to figures from the US Energy Information Administration.