'Pretty striking': Oil price plunges to six-week low

US Treasury Secretary Steve Mnuchin meets with Prime Minister Benjamin Netanyahu in Jerusalem

US Treasury Secretary Steve Mnuchin meets with Prime Minister Benjamin Netanyahu in Jerusalem

Harsh, but with the deal maker in the White House, if the U.S. has a reason to squeeze Saudi Arabia to bump up production and keep a lid/lower crude oil prices, this is the time. But the scandal does reveal one thing.

Iran's minister of petroleum says Saudi Arabia has submitted to USA pressure, violating an OPEC agreement reached in June not to raise its production.

The surest sign is the reassurance given by energy minister Khalid al Falih yesterday that Riyadh has no intention of deploying an oil embargo in defence of its interests.

On Sunday, Saudi Arabia described the deeply shocking incident as a "huge and grave mistake", as it attempts to clear crown prince Mohammed bin Salman of any responsibility.

Falih said he would not rule out the possibility that Saudi Arabia would produce between 1 million and 2 million barrels per day (bpd) more than current levels in future.

"We will meet any demand that materializes", Al-Falih said at the country's signature investment conference, which is being overshadowed by an global outcry over the killing of Saudi government critic Jamal Khashoggi.

Looking at the current short-term timetable, the US sanctions against Iran are set to start on November 4.

Washington plans new sanctions targeting Iran's oil sector from November 4 with the aim of stopping the country's involvement in conflicts in Syria and Iraq, and bringing Tehran to the negotiating table over its ballistic missile programme.

USA crude fell US$3.17, or 4.6 per cent, to US$66.19 a barrel, after hitting a session low of US$65.74, the lowest level since August 20.

The Saudis have deep pockets, thanks to the strong global oil price, and they are courted by many around the world for their wealth.

Oil prices spiked on the move, as they did later in 1979 because of the Iranian revolution. "We work to stabilise global markets and to facilitate global economic growth", he added.

"I would expect that if we do give waivers, it will be significantly larger reductions", he said in an interview with Reuters.

The oil market has been concerned that Saudi Arabia might cut crude supply in retaliation for potential sanctions over the killing of journalist Jamal Khashoggi.

USA crude inventories probably rose 3.7 million barrels last week, according to a Bloomberg survey of analysts. He added that Riyadh had capacity to increase output to 12 million bpd and its Gulf OPEC ally, the United Arab Emirates, could add another 0.2 million bpd.

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