Saudi Arabia Says It Will Increase Output To Keep Oil Market Stable

A day after Saudi Arabia said it would retaliate to any possible U.S. sanctions over the disappearance of a journalist, which led to a spurt in Brent crude prices, the world's largest oil exporter struck a conciliatory tone in India.

Khalid al-Falih, the energy minister of the kingdom, said it will continue to be responsible and help keep oil markets stable. He also assured of increased oil production in a month. “Saudi Arabia is currently producing 10.7 million barrels of oil per day and our production capacity is up to 12 million barrels,” Falih told reporters on the sidelines of the India Energy Nation Forum in Delhi. “The kingdom will raise production starting next month.”

Tensions have flared between the U.S. and Saudi Arabia over the disappearance of Jamal Khashoggi, a journalist with the Washington Post who was critical of the Middle East nation. The journalist was last seen entering the Saudi embassy in Turkey on Oct. 2 and never returned. Turkey claims that he was killed there—a claim that Saudi Arabia has denied.

Modi Warns Against High Crude Prices

Meanwhile, global oil companies today met with Prime Minister Narendra Modi, who warned them against the impact of high crude prices. “Modi has cautioned us not to kill the hen that lays the golden eggs,” Falih said.

Brent crude prices surged to more than $86 a barrel, a four-year high, as the Organisation of Petroleum Exporting Countries resorted to production cuts to prop up the prices. India, the world's third-largest consumer of oil, felt the impact on its trade and current account deficits.

The nation is also as bracing for a shortfall in supply from Iran after U.S. slapped sanctions on the Persian Gulf nation early this year. Sanctions bearing direct impact on trade in the oil and gas sector with Iran will start on Nov. 4.

Saudi Arabia Eyes Fuel Retail In India

Falih said the Middle East nation wants to invest in the fuel retail business and strategic crude reserves of Asia's third-largest economy, which he said was a “strategic priority”. “Saudi Aramco (the state-run oil producer) is keen on investing in various segments like fuel retail, petrochemicals, building an integrated downstream business spanning India as well as our commitment to invest in India's strategic crude oil storage programme,” said Falih.

The $44-billion investment by Saudi Aramco in the upcoming Ratnagiri refinery, according to al-Falih, is just the start of cooperation between the two countries. He invited Indian companies to form more partnerships with the Saudi Arabia—OPEC's most powerful member.