Saudi Arabia is planning to cut oil production to meet demand, amid growing tensions with Iran and sanctions over its nuclear program, an oil minister said on Sunday.
The ministry’s statement on the state of the oil sector, which was published in the state-run Al Arabiya News, said the government is aiming to cut output to 20 million barrels per day (bpd) and increase its oil production from 3.8 million bpd to 5.6 million bps.
It added that the government will also increase the amount of oil that it produces to 80 percent of the level it currently produces.
Iran’s nuclear deal with world powers, which took effect on Jan. 1, aims to reduce Tehran’s ability to produce and refine oil at home, including through imports.
Saudi Arabia’s deputy oil minister Mohammed bin Abdulaziz al-Sabah said the country’s decision to increase production would be a major challenge for the global economy.
“The decision of Saudi Arabia to increase its production of natural gas to 40 percent from 30 percent is a major step that will increase the pressure on Iran’s natural gas production,” he said.
“We will not allow Iran to continue to produce natural gas as a way of generating revenue for itself, even if this is done at the cost of the economy of other countries.”
Iranian state news agency IRNA reported on Saturday that Saudi Arabia would cut its production to 30 million bp in 2017 and 20 million bq/d in 2020.
The agency also reported that Iran would increase its output to 40-60 million bd in 2017.
Iranian oil minister Bijan Namdar Zanganeh said in a statement on Saturday, “We have agreed with Saudi Arabia and Russia to continue our production at 20 million-30 million b/d and 30 million-40 million b /d for the coming year.
We are also in talks with other countries to increase our production.”
In a separate development, the United States said it was looking at sanctions relief for the first time since the 1979 Islamic Revolution.
President Donald Trump signed an executive order on Sunday, saying the United State will impose a “temporary and targeted” embargo on the sale of oil and gas from Saudi Arabia, Egypt, the UAE, Bahrain, the US, and the European Union, and impose sanctions on individuals and entities who are complicit in the sanctions.
The order was signed by Trump and Tillerson, who is the secretary of state.
It does not include measures targeting Iran or anyone else.