Washington — As oil prices hit new four-year highs Wednesday, the US State Department accused OPEC of withholding 1.42 million b/d of spare capacity from the world market.
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Citing an OPEC spare capacity estimate from the US Energy Information Administration, State said that Trump administration officials are working with OPEC to produce the spare capacity they are "not deploying." State said that US was "doing its part" to meet rising global demand.
"The United States continues to engage with OPEC countries and we encourage them to utilize their spare capacity to ensure world oil supply meets the demand," the State spokesperson said in a statement to S&P Global Platts on Wednesday.
The spokesperson said that while OPEC and non-OPEC producers, including Russia, "continue to withhold production," the US is ramping up output, citing an EIA estimate that domestic production will increase by nearly 1 million b/d within a year.
"The United States is doing its part to add to the oil supply," the spokesperson said.
The statement comes as President Donald Trump has pressed Saudi Arabia to boost oil output in order to stabilize prices and continues to criticize OPEC nations for driving up prices.
December ICE Brent settled at $86.29/b Wednesday, up $1.49/b from Tuesday, while November NYMEX crude settled at $76.41/b Wednesday, up $1.18/b. Both settlements were the highest since 2014.
OPEC, Russia and nine other countries pledged in June to reduce overcompliance with production cuts that have been in force since January 2017, which they say will result in a 1 million b/d output rise from May levels.
When the producers met again in Algiers on September 23, they reaffirmed their commitment to reduce overcompliance but said they were 500,000-600,000 b/d short of the goal. The oil ministers did not announce any further production.
Saudi Arabia and Russia stressed Wednesday in Moscow that they are boosting oil production to record levels in response to global demand, not geopolitics or pressure from the US administration.
Saudi Arabia is producing an average 10.7 million b/d, with November projected to come in "slightly higher," energy minister Khalid al-Falih said at Russia Energy Week.
"There is not a single customer who has requested a barrel since June that hasn't been supplied," he said.
Russia reported record output of 11.356 million b/d in September but can boost production by another 200,000-300,000 b/d "within several months," energy minister Alexander Novak said at same conference.
Trump spoke with Saudi King Salman bin Abdulaziz al-Saud by phone Saturday about efforts to stabilize the world oil market. Trump then publicly questioned US military support for Saudi Arabia at two separate campaign rallies, one Saturday in West Virginia, the other Tuesday night in Mississippi.
US Secretary of State Michael Pompeo spoke with Saudi Crown Prince Mohammed bin Salman Wednesday, but State declined to say if oil prices were discussed.
The State spokesperson Wednesday declined to comment whether the administration was considering delaying or phasing in sanctions on Iranian crude exports as prices continue to climb.
"We are monitoring this situation closely but we will not get ahead of any decisions regarding this issue," the spokesperson said.
Rising global oil prices will not deter the Trump administration from pushing sanctions forward on Iranian crude exports in November, several analysts told Platts this week.
"That isn't to say that some people aren't mindful of the price and are concerned about its fallout," Elizabeth Rosenberg, director of the energy program at the Center for a New American Security, said Tuesday. "But, broadly speaking, this administration is very comfortable with economically destructive policies and they even embrace them. They'll be happy to place the blame on someone else."
Platts Analytics expects Iranian crude and condensate exports to fall to 1.1 million b/d by October loadings, and to 800,000 b/d by Q4 2019, down from 2.91 million b/d in April. -- Brian Scheid, email@example.com
-- Meghan Gordon, firstname.lastname@example.org
-- Edited by Annie Siebert, email@example.com