Four loud explosions heard in Saudi Arabia

Geneva Stokes
May 10, 2018

A spokesman for the Saudi-led coalition said Saudi air defenses hours earlier had also intercepted a ballistic missile originating from Yemen and targeting Saudi Arabia's southern city of Jizan.

Renewed US sanctions could potentially cause drastic reductions in Iran's exports, leading to undersupply and higher oil prices, thereby shifting the market to a state of disequilibrium. However, lack of production capacity to increase output by another 2,000,000 barrels. Their crude is a close equivalent to Iranian grades.

"People shouldn't take it for granted that Saudi Arabia will produce more oil single-handedly".

A number of countries have already cut their reliance on Iranian oil, as well as other "traditional" sources of supply, due to surge in cheaper US crude exports.

Trump accused OPEC last month of "artificially" boosting oil prices in a message on Twitter, the first time he has mentioned OPEC on social media.

OPEC officials from Saudi Arabia, the UAE and Russian Federation along with few other producers in the pact are due to meet in Saudi Arabia on May 22-23 as part of a monthly meeting for the Joint Technical Committee which monitors the oil market.

The outlines of that agreement remain unclear, and may not be entirely clear to Washington and Riyadh, but the understanding is vital to the successful implementation of sanctions.

Brent crude oil touched its highest since November 2014 at $77.20 a barrel.

The original agreement between the Organization of the Petroleum Exporting Countries, led by Saudi Arabia, and other oil exporters, led by Russian Federation, set output levels in December 2016. The agreement is due to expire at the end of 2018.

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Even before the United States made a decision to withdraw from the Iran nuclear agreement, OPEC's output agreement was in danger of being overtaken by events.

OPEC's objective its still to reduce global oil inventories to an acceptable level and any adjustment in production targets should be done in a coordinated way, the OPEC source said.

The result has been a sharp increase in prices, which has been broadly welcomed by OPEC members, especially Saudi Arabia, which needs the revenues to pay for its ambitious transformation programme.

The recent upswing in prices - which has almost tripled crude values from lows hit in early 2016 - has led to speculation that the output curbs will soon be lifted as countries reliant on oil revenue seek to boost their coffers by raising their exports.

But further significant price increases threaten to complicate OPEC's strategy by accelerating the upturn in shale drilling, as well as denting the growth in oil consumption. Saudi Arabia has also imposed an air and sea blockade on Yemen.

It was the busiest day in USA front-month contracts since August, and for Brent the busiest in nearly a month.

US light crude was up $1.70 a barrel, or nearly 2.5 percent, at $70.76, near highs also last seen in late 2014. That world no longer exists.

"We have managed to put together this new alliance between OPEC and non-OPEC".

But the USA sanctions on Iran, assuming they are effective, mark the end of the current output agreement.

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