Washington (June 08, 2018): 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.
Riyadh, Tehran’s arch rival, has long been a close Washington ally, but direct pressure on a member of Organization of the Petroleum Exporting Countries (OPEC) over oil policies is rare. Washington last pressed Saudi Arabia to increase output in 2012.
Riyadh has said that even though prices have spiked to over $80 per barrel, the highest since 2014, the market has yet to recover from a long slump. Until the phone call, Saudi officials had been saying it was too early to raise output.
Riyadh took this line partly because higher crude prices could help the stock market float of a stake in state oil giant Saudi Aramco expected to take place in 2019, Saudi industry sources said.
So there was shock among some of Saudi Arabia’s fellow OPEC members when it issued a supportive statement hours after Washington imposed new sanctions on Tehran. It said it was ready to raise output to offset any supply shortage.
Three sources familiar with the matter said a senior US administration official had called Saudi Crown Prince Mohammed bin Salman before Trump’s announcement to make sure Washington could count on Riyadh, the de facto OPEC leader.
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.
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.”
OPEC will meet on June 22 and needs a consensus of all members to officially change its output policy. Iran’s oil minister, Bijan Zanganeh, said last week he did not agree on the potential need to increase global oil supplies.
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