Trump's Bizarre Tweet About Saudi Oil

President Donald Trump put out this tweet on Saturday:

Just spoke to King Salman of Saudi Arabia and explained to him that, because of the turmoil & disfunction in Iran and Venezuela, I am asking that Saudi Arabia increase oil production, maybe up to 2,000,000 barrels, to make up the difference...Prices to high! He has agreed!

— Donald J. Trump (@realDonaldTrump) June 30, 2018

But at an OPEC meeting last week, Saudi Arabia announced it would increase production by 200,000 barrels per day.

In response to the tweet, a White House statement toned down the President's claim:

King Salman affirmed that the Kingdom maintains a two million barrel per day spare capacity, which it will prudently use if and when necessary to ensure market balance.

A statement about the call between the two leaders reported by Saudi media did not even mention any intention by Saudi Arabia to raise production by 2 million bpd.

And here's the thing, Saudi Arabia has a maximum sustainable capacity of 12 million bpd, but it has never tested that level of production.

After the increase in production of 200,000 bpd, the Saudi Kingdom will be producing at 11 million bpd. Thus, it is unclear how the Saudi's could even increase oil production by 2 million bpd.

And Iran is none too happy about the President's tweet. They correctly point out that if the Saudis had agreed to Trump’s request, “that means he is calling on them to walk out from OPEC,” Iran’s OPEC governor Hossein Kazempour Ardebili, said in an interview. “There is no way one country could go 2 million barrels a day above their production allocation unless they are walking out of OPEC.”

-RW