- Oil prices fell more than 3% on Monday.
- Saudi Arabia looks poised to shoot for record output.
- Analysts say Russia could also raise production more than previously expected.
- Watch oil trade in real time here.
Crude oil fell more than 3% on Monday after reports that Saudi Arabia is offering extra cargo, raising expectations for the world’s largest oil exporter to work toward record production in the coming months.
Saudi Arabia offered extra crude volumes beyond contractual supplies to some buyers in Asia, Bloomberg reported Monday.
President Donald Trump has pressured the unofficial leader of the Organisation of Petroleum Exporting Countries to raise output following his decision to withdraw the US from the Iran nuclear deal. Analysts say has partly pushed gasoline prices to four-year highs. As part of the move, the State Department last month told most countries to cut off oil imports from OPEC’s third-largest producer by November or face US sanctions.
“Saudi Arabia has preemptively raised output ahead of a potential shortfall from lost Iranian volumes later in the year,” Virendra Chauhan, an oil analyst at Energy Aspects Ltd., told Bloomberg. “It will most likely continue to place its volumes in Asia.”
Also on Monday, Trump met with Russia’s Vladimir Putin at a closely watched summit in Helsinki, Finland.
Capital Economics’ Thomas Pugh said there is a “fair chance” the two leaders could come to an agreement for Russia to raise oil output more than previously expected.
OPEC and its allies last month agreed to ease supply cuts enacted in 2016 to counter a global glut. Saudi Arabia and Russia, which leads non-OPEC countries in coordinating oil output, pushed for the output increase at that meeting.
The prospect of increased OPEC output comes amid unconfirmed reports that the US could turn to its emergency oil stockpile. Bloomberg reported Friday that the Trump administration is “actively considering” a release from the Strategic Petroleum Reserve. The White House did not respond to a request for comment.
WTI is up more than 54% year-over-year.
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