Saudi Arabia signaled it's ready to deliver on a pledge to boost the supply of oil after the collapse of OPEC talks two days ago.The world's largest oil exporter will increase production, though it's too early to say by how much, a Saudi industry official with knowledge of the matter who declined to be identified, said today. Al-Hayat, citing senior officials, reported earlier that the kingdom will boost output to 10 million barrels a day in July from the current 8.8 million. Oil fell as much as 3.3 percent, the most in three weeks.
Saudi Arabia "wants everyone to understand that they're serious," Olivier Jakob, an analyst at Petromatrix GmbH in Zug, Switzerland, said today by phone. "It's important that the Saudis are signaling that they're offering additional barrels."
The June 8 meeting of the Organization of Petroleum Export Countries broke down after six nations led by Iran opposed a Saudi plan to replace lost output from Libya and aid the U.S. economic recovery, Saudi Oil Minister Ali al-Naimi said on the day. The kingdom, along with Kuwait, Qatar and the United Arab Emirates, wanted to increase production by 1.5 million barrels a day. OPEC accounts for 40 percent of global supply.
This is as much an attempt to hurt Iran's economy as it to alleviate the economic effects on the rest of the world and the US in particular.