Bloomberg

Bloomberg

Saudi Arabia’s crown prince, facing U.S. pressure to tame surging oil prices, insisted that the kingdom is fulfilling promises to make up for Iranian crude supplies lost to American sanctions.“The request that America made to Saudi Arabia and other OPEC countries is to be sure that if there is any loss of supply from Iran , that we will supply that,” Mohammed Bin Salman, heir to the Saudi throne, said in an interview. “And that happened.”Yet the action appears lost on President Donald Trump , who continues to attack the Organization of Petroleum Exporting Countries for letting prices rally while he seeks to choke off supplies from Iran, a political antagonist of the Saudis. On Wednesday the State Department urged OPEC to tap its reserve supplies.The Saudis’ efforts have also failed to prevent crude hitting a four-year high above $86 a barrel in London this week.Oil traders are concerned that the kingdom isn’t ramping up quickly enough, and that it may not have enough capacity to fully cover Iran’s losses. Yet a coalition of producers from OPEC and beyond has recently boosted output by 1.5 million barrels a day, double the 700,000-barrel decline suffered so far by Iran, according to the crown prince.“We export as much as two barrels for any barrel that disappeared from Iran recently,” Prince Mohammed said. “So we did our job and more.”Saudi Arabia is now pumping about 10.7 million barrels a day -- close to a record -- and can add a further 1.3 million “if the market needs that,” the prince said. However, many analysts doubt that 12 million barrels a day can be reached quickly, or maintained for an extended period.“Near-term spare capacity is effectively maxed out,” Amrita Sen, chief oil analyst at consultant Energy Aspects Ltd., said last week.Prince Mohammed said that the kingdom could push capacity beyond 12 million barrels a day with additional investment, and that extra supplies are also available from Saudi Arabia’s allies. The so-called OPEC+ coalition spans other Gulf producers like the United Arab Emirates, as well as countries outside OPEC such as Russia.Trump is reimposing sanctions on Iran after quitting an agreement on the country’s nuclear program, and the measures will take full effect in November. While many -- including Russian President Vladimir Putin -- have blamed Trump’s actions for oil’s rally, the price is actually being driven by losses in other countries, according to Prince Mohammed.“The higher price that we have in the last month, it’s not because of Iran,” he said. “It’s mostly because of things happening in Canada and Mexico, Libya, Venezuela and other countries.”Saudi Arabia and Iran are both members of OPEC, yet they’re bitterly opposed on political issues and continue to clash in conflicts across the Middle East from Syria to Yemen.