Pressure on Saudi Arabia to pump more oil

Updated: Jul 14

According to the Financial Times, the Kingdom will consent to raise production if Russia's output declines.

If Russia's output drastically decreases as a result of the new EU sanctions, Saudi Arabia may offer to increase oil production to lower rising prices, the Financial Times reported on Thursday.

The US has frequently demanded that the Kingdom, the top oil producer in the world, increase crude production right away. The Saudi government, according to the FT's sources, thinks that its spare capacity should be maintained in reserve because the situation in the world oil markets has not yet reached a critical point. The publication claims that a change in tone has occurred as a result of a recent high-level US delegation's visit to Riyadh.

Additionally, a new EU oil embargo is currently in effect. The sanctions, which were adopted on Tuesday, forbid the maritime importation of Russian oil into the EU. By the end of the year, the prohibition will "essentially reduce over 90% of oil imports from Russia to the EU," according to Ursula Von der Leyen, president of the European Commission.

To further impede Russia's capacity to export its petroleum, the EU and the UK have jointly decided to prohibit insurance for ships carrying Russian oil cargoes. After Saudi Arabia, Russia is the second-largest oil exporter in the world. Before it began its military campaign in Ukraine, it supplied more than 10% of the world's crude.

This week, oil prices were trading close to a decade-high of $120 per barrel after climbing in recent months as demand has outpaced supply.

The output increase that was initially planned for September may instead be revealed during the OPEC meeting on Thursday, according to the Financial Times.

Amid worries about the mounting economic pressure the sanctions are putting on Russia, the bloc is reportedly examining whether to exempt the nation from the oil production pact. Moscow might expand supply to make up for the shortfall if it is exempted from other suppliers like Saudi Arabia.

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