President Trump tweeted on Saturday that he had once again leaned on Saudi Arabia, the world’s largest oil exporter, to increase production by as much as 2 million barrels a day.
Since May, Mr. Trump has put pressure on the Saudis and the Organization of the Petroleum Exporting Countries to increase supplies through tweets and other messages. His tweet on Saturday came as many Americans were hitting the roads to begin an extended Fourth of July holiday.
In recent weeks, worries about declining oil exports from Iran have been pushing up oil prices. Analysts say that Saudi help in making up for lost Iranian crude oil will be crucial to Mr. Trump’s efforts to put pressure on the government of Iran while not forcing prices up too high to cause political damage in the United States. “This strategy hinges on Saudi Arabia,” Helima Croft, an analyst at RBC Capital Markets, said in an interview on Friday.
Brent crude, the international benchmark, was selling on Friday for over $79 a barrel, and there is talk that in certain circumstances a return to $100 a barrel oil is possible. “It’s certainly easy to imagine a scenario at this point where oil prices hit $100 again this year,” said Jason Bordoff, director of the Center on Global Energy Policy at Columbia University.
Pressure from Mr. Tump did help prod Saudi Arabia, Russia and other producers to agree to gradually increase supply by as much as 1 million barrels a day at meetings on June 22 and June 23 in Vienna. “We will do whatever is necessary to keep the market in balance,” the Saudi energy minister, Khalid Al-Falih, told journalists at OPEC headquarters in Vienna at the end of the meeting, with Russia’s energy minister Alexander Novak seated at his side.
Since then, though, the Trump administration has upped the ante by signaling a tough line on closing down Iranian production. Since the lifting of sanctions in 2016, Iran has returned as a major oil supplier, selling around 2.5 million barrels a day, or more than 2 percent of global supplies. Traders worry that a major curtailment of Tehran’s output could risk creating a supply crunch that might drive prices skyward.
“If we take 2 million barrels of oil off the market, what is going to be left in the tank?” Ms. Croft asked.
Mr. Trump tweeted that he had asked Saudi Arabia to increase production by as much as 2,000,000 barrels a day to compensate for what he called “turmoil & disfunction in Iran and Venezuela,” but most analysts think that coming up with that much oil quickly would be a challenge for the Saudis.
Saudi Arabia, for instance, says it has 2 million barrels a day in spare capacity, but analysts are skeptical that it can easily and sustainably add more than 700,000 barrels of production a day without drilling and other work that would take time. “Once you get above that level, we are into uncharted territory,” said David Fyfe, chief economist at the Gunvor Group, a major trading house. “Can they really push above that quickly?”
Aside from the Saudis, only a handful of producers, including Kuwait, the United Arab Emirates and Iraq, are likely to be able to put more oil on the market soon. The International Energy Agency, the Paris-based group that represents consumer countries, recently estimated what it called “short order supply” from the Middle East, including Saudi Arabia, at 1.14 million barrels a day. Russia could also add as much as 400,000 barrels a day, analysts say.
While production in the United States has been rising rapidly, largely through the extraction of oil from shale rock, analysts forecast that the growth is likely to slow in the coming months because of a lack of sufficient pipelines to transport the oil to markets.
At the same time, factional fighting in Libya is causing a large outage, while the oil output of Venezuela, once a major producer, has fallen by around 1 million barrels a day over the last two years, with further steep declines possible in the coming months.
The market is not short of oil now. But traders are concerned that all of these problems may add up to shortages down the road. Estimates of how much spare capacity or quickly accessible oil is available vary, but most experts think it would be challenging to cover a large drop in Iranian exports combined with other outages.
In a statement on Saturday, Saudi Arabia said that King Salman had spoken to Mr. Trump and that the leaders discussed the need to address any potential shortages in the supply of oil as well as maintain stability in the oil markets. The statement did not include any specific figures.