Oil edged above US$80 a barrel on Monday, lifted by nervousness over a worsening diplomatic crisis between Saudi Arabia and the West, just two weeks before U.S. sanctions potentially choke off Iranian crude supplies.
The kingdom, which produces more than a tenth of global supplies, had vowed on Monday not to withhold its output as a political weapon amid the worldwide backlash over the murder of journalist Jamal Khashoggi.
Saudi Arabia has no intention of unleashing a 1973-style oil embargo on Western consumers and will isolate oil from politics, the Saudi energy minister said on Monday amid a worsening crisis over the killing of Saudi journalist Jamal Khashoggi.
Falih said the oil producers will continue to monitor supply and demand in the market especially with the Iran sanctions looming and would be ready to act if needed. "As I have said many times, there is no replacement for Iranian oil in the market", he said.
Economist Intelligence Unit energy analyst Peter Kiernan said it would be self-defeating for Saudi Arabia to cut oil supply, as it would risk losing market share to other exporters while losing its reputation as a stable player in the market. Saudi Arabia must put in place measures to ensure something like this can never happen again.
Saudi Arabia may boost its oil output by between 1 million and 2 million barrels a day in the future, Al-Falih said at a conference in Riyadh.
He said that if oil prices went up, it would slow the global economy and trigger a recession.More news: Ohio State knocked out of top 10 in latest college football poll
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USA light crude dropped $3.03, or 4.4 percent, to $66.33 a barrel, after earlier hitting a two-month low at $65.74.
The minister reiterated that the market is unable to find a replacement for Iran's oil, urging Trump to abandon his plan to impose sanctions on the country.
"My role as the energy minister is to implement my government's constructive and responsible role and stabilizing the world's energy markets accordingly, contributing to global economic development". "So we have to use oil reserves".
Since that agreement, oil prices have more than doubled and were now hovering at just under $80 a barrel. "That policy has been consistent for many years", Falih said.
"The big unknown is how much Iranian oil will be off the market and we'll know in about a month's time".
In other news, USA drillers added four oil rigs in the week to October 19, bringing the total count to 873, Baker Hughes energy services firm said on Friday, raising the rig count to the highest level since March 2015. He added that Riyadh had capacity to increase output to 12 million bpd and its Gulf OPEC ally, the United Arab Emirates, could add another 0.2 million bpd.