Algeria warns Saudi Arabia, Russia against increasing oil output

The White House has backed off a tweet from President Donald Trump indicating he had convinced the king of Saudi Arabia to produce an extra two million barrels of oil per day

However, with Saudi Arabia, leader of the OPEC and non-OPEC coalition agreeing to tighten supply breaking the agreement, there could be an avalanche from other countries like Russian Federation and Iran and Iraq already angling to increase its production.

A US State Department official said in a briefing that more than 50 worldwide companies intend to drop the use of Iranian oil before the 4 November restart of the sanctions.

The Wall Street Journal in turn cited a high-ranking Saudi official as saying that Riyadh made no concrete promises to Trump but assured him of its ability to satisfy the market's demands.

Last month President Donald Trump withdrew the United States from the landmark Iran nuclear deal, re-imposing USA sanctions that had been suspended in return for curbs on Tehran's nuclear programme.

Iran shipped out over 2 million barrels per day of oil previous year, with Asia taking almost three quarter of the supply and the remainder heading to Europe.

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"US oil diplomacy has at points in the past been highly successful in calming oil markets, and it has generally been more successful the quieter it has been", the analysts wrote. While the comments were ambiguous, Iranian officials in the past have threatened to block the Strait of Hormuz, a major oil shipping route, in retaliation for any hostile USA action.

Oil prices climbed down from their 3 ½ year high to reach US$73 per barrel, with Brent trading at US$76.96 Tuesday afternoon.

Oil sanctions on Iran are expected to resume on November 4, two days ahead of congressional midterms.

Some key countries are reliant on Iranian oil imports, including India and Turkey.

The White House said Saturday that King Salman had promised President Donald Trump that he would raise oil production if needed.

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Craig added that more issues could develop as Washington tightens the sanctions noose on Iran and Venezuela.

The impact on the tanker trade remains unclear as oil buyers could turn to regular sources such as Saudi Arabia for more barrels, or look further afield at long distance sources such as the US.

Those tweets implied that supply deficits will require all of the world's remaining spare production capacity to come online, according to Standard Chartered. "Of course. That's what we're doing, absolutely", he said.

"Also, taking a broad range of estimates from IEA, EIA and others, Saudi held spare capacity in the range of 1.3 - 2.1 mb/d when oil production was ~10 mb/d".

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