US asks Saudis and some OPEC countries to increase production to offset the Iran production

Bloomberg/Fuel Fix:
The U.S. government has quietly asked Saudi Arabia and some other OPEC producers to increase oil production by about 1 million barrels a day, according to people familiar with the matter.

The rare request came after U.S. retail gasoline prices surged to their highest in more than three years and President Donald Trump publicly complained about OPEC policy and rising oil prices on Twitter. It also follows Washington’s decision to reimpose sanctions on Iran’s crude exports that had previously displaced about 1 million barrels a day, or just over 1 percent of global production.

While U.S. lawmakers have habitually criticized the Organization of Petroleum Exporting Countries at times of high oil prices, and the government has on occasion encouraged the cartel to pump more, it’s unusual for Washington to ask for a specific output hike, the same people said, asking not to be named discussing private conversations. It’s not clear precisely how the request was communicated.

The American request was debated at a meeting of some Arab oil ministers over the weekend in Kuwait City, the people said. A statement published after the talks pledged to “ensure stable oil supplies are made available in a timely manner to meet growing demand and offset declines in some parts of the world.” Saudi Arabia and Russia last month proposed a gradual production increase, although other members of the group have yet to agree.
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It is certainly in the Saudis interest to increase production which would lead to increased revenue at a time when Iran faced declining revenue to support its aggression in the region.  The Russians also need the money from increased production as long as the price remains stable. 

While the US production continues to increase, the ethanol mandate is perversely making it difficult for refiners to switch their operations to handle the light crude being produced in the shale wells.  Instead, they are having to waste money on buying RINs which have become a nonproductive expense.

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