Middle East

Saudi Arabia ‘no intention’ of 1973 style oil embargo amid Khashoggi scandal

Dozens of CEOs and government officials pulled out of Saudi Arabia's investment conference in response to Khashoggi's murder (Reuters)

Saudi Arabia has no intention of unleashing a 1973-style oil embargo on Western consumers and will isolate oil from politics, the Saudi energy minister said on Monday amid a worsening crisis over the killing of Saudi journalist Jamal Khashoggi.

“There is no intention,” Khalid al-Falih told Russias TASS news agency when asked if there could be a repetition of the 1973-style oil embargo.

Top US politicians turned their anger on Saudi Crown Prince Mohammed bin Salman on Sunday and said they believed he ordered the killing of Khashoggi, although the Trump administration has maintained a more cautious stance.

Several have suggested imposing sanctions on Saudi Arabia in recent days while the kingdom – the worlds largest oil exporter – has pledged to retaliate to any sanctions with “bigger measures”.

“This incident will pass. But Saudi Arabia is a very responsible country, for decades we used our oil policy as a responsible economic tool and isolated it from politics,” Falih said.

“My role as the energy minister is to implement my governments constructive and responsible role and stabilizing the worlds energy markets accordingly, contributing to the global economic development,” Falih said.

He said that if oil prices went up, it would slow down the global economy and trigger a recession. But he added that with Iranian sanctions coming into full force next month, there were no guarantee oil prices would not go higher.

“I cannot give you a guarantee, because I cannot predict what will happen to other suppliers,” Falih said when asked if the world can avoid oil prices hitting $100 per barrel again.

“We have sanctions on Iran, and nobody has a clue what Iranians export will be. Secondly, there are potential declines in different countries like Libya, Nigeria, Mexico and Venezuela,” he said.

“If 3 million barrels per day disappear, we cannot cover this volume. So we have to use oil reserves,” he said.

Falih said Saudi Arabia would soon raise output to 11 million barrels per day (BPD) from the current 10.7 million. He added that Riyadh could increase production to 12 million BPD and Gulf OPEC ally, the United Arab Emirates, could add another 0.2 million BPD.

“We have relatively limited spare capacities, and we are using a significant part of them,” he said.

Global supply next year could be helped by Brazil, Kazakhstan and the United States, he added.

“But if you have other countries to decline in addition to the full application of Iran sanctions, then we will be pulling all spare capacities,” Falih said.

Pressure on the kingdom

Media companies, politicians and high-profile figures have been pulling out of a Saudi investment conference scheduled for Tuesday in the wake of the killing of Khashoggi.

US Treasury Secretary dropped out on Thursday, saying that he decided to withdraw his participation in the conference – dubbed "Davos in the Desert", after a meeting with US President Donald Trump and Secretary of State Mike Pompeo.

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Media companies, executives quit Saudi event over missing journalist

Fox Business Network also announced on Thursday it was also pulling out of the investment conference, joining CNN, the New York Times, CNBC, Bloomberg, the Financial Times and other media groups that have already cancelled plans to go to Riyadh.

"FOX Business Network has cancelled its sponsorship and participation in the Future Investment Initiative conference in Saudi Arabia. We continue to seek an interview with Crown Prince Mohammed bin Salman," the network said in a statement.

French Finance Minister Bruno Le Maire, UK Trade Minister Liam Fox and Dutch Finance Minister Wopke Hoekstra also pulled out of the conference earlier in the day, while Dutch Foreign Minister Stef Blok said a trade mission planned for December to Saudi Arabia likely would not go ahead, either.

Earlier this week, Christine Lagarde, the head of the International Monetary Fund, said she would also not be going to the event.

Turkish sources told MEE that Khashoggi was killed inside the Saudi consulate.

Saudi Foreign Minister Adel al-Jubeir told Fox News on Sunday that the killing of Washington Post columnist Jamal Khashoggi inside the Saudi consulate in Istanbul was a "huge and grave mistake" and vowed that those responsible would be punished.

Saudi Arabias explanations have drawn bipartisan scepticism from US politicians and outrage from opposition MPs in the UK, even as US President Donald Trump continues to support the crown prince amid a retreat from describing Saudi Arabias account as credible as recently as Friday.

“Theres been deception, and theres been lies,” Trump said in an interview with the Washington Post on Saturday. “Their stories are all over the place.” Still, he praised the crown princes leadership, saying he is “a strong person, he has very good control.”

The Saudis are also significant arms buyers from both the US and Britain, and Trump argues that those sales mean jobs.

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