2018 budget in danger as Saudi Arabia pump 2m more barrels

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The cabinet stressed that one of the most important objectives of the kingdom's petroleum policy is to always seek to achieve balance and stability in oil markets, as well as to coordinate and consult with other producing countries and major consuming countries.

Saudi Arabia, which has been pumping around 10 million barrels per day, holds the largest spare capacity in the world and is the only country that can add substantial supply to the market.

The US on Monday said it is prepared to work with nations that are reducing their oil imports from Iran on a case-by-case basis, but ruled out granting waivers to countries like India or Turkey as it could substantially reduce pressure on Tehran.

"We have already seen a move towards UAE increasing investment in hydrocarbon sector".

Oil prices rose on Friday on worries that U.S. sanctions against Iran would take away significant volumes of crude oil from world markets while oil demand worldwide increases.

Oil prices rose strongly last week, with the U.S. crude contract hitting its highest in 3-1/2 years at $74.46.

Brent crude was trading at 78.05 a barrel at 4pm UAE time on Tuesday. The agreement, which was aimed at boosting oil prices, was prolonged twice, with the last extension set to be in force until the end of 2018.

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The White House later walked back the president's comments, saying the king said his country can raise oil production if needed.

Trump's move comes as the world suddenly finds itself dangerously short of meeting rising global demand that's set to hit 100 million barrels per day by the fourth quarter, compared to 98.7 million during the same period past year.

Geoffrey Craig, the oil futures editor at Platts, said the drain on USA inventory levels is in part because of higher domestic exports, which set a record for the week ending June 22 at 3 million barrels per day.

This has been U.S. policy since President Donald Trump pulled out of the Iran nuclear accord on May 8, but many foreign capitals have been demanding waivers to allow some trade to continue.

Oil rallied early in the session on supply concerns, then slid as traders booked profits ahead of the July Fourth holiday in the United States, and bet that global supply shortages would not persist as long as expected.

Meanwhile, Libyan supplies are down by as much as 350,000-bpd after the closure of the country's two biggest ports, while Angolan production has also been falling due to chronic underinvestment. Previously, the market had priced in a loss of about 700,000 bpd through 2019.

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