Crude prices plunge as Saudi Arabia reassures market on supply

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"I dont rule out that the kingdom´s production which has been 9-10 (million barrels per day) over the last decade or so will be a million to two millions (barrels) higher", Falih said, without providing a time frame.

Saudi Arabia said Monday it had no plans to repeat its harsh 1973 oil embargo, even as relations with the West sour following the killing of Saudi critic Jamal Khashoggi.

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.

Meanwhile, Russia's oil production is now 150,000 bpd higher than the October 2016 level, the baseline for the global oil production deal, TASS news agency quoted Energy Minister Alexander Novak as saying. Shipping brokerage Eastport on Tuesday said crude prices were "widely expected to decline in coming months, as rising production in the United States offsets increasing global demand".

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.

Additionally, U.S. Treasury Secretary Steve Mnuchin, visiting Israel this week, said on Sunday that it will be hard for countries to receive waivers on Iran oil sanctions.

Falih said the oil producers will continue to monitor supply and demand in the market especially with the Iran sanctions looming and would be ready to act if needed.

Oil prices spiked on the move, as they did later in 1979 because of the Iranian revolution.

The pledge comes despite Saudi Arabia's previous threats to retaliate to any sanctions with "greater action". Riyadh has refrained from using oil as a direct weapon since then. "We work to stabilise global markets and to facilitate global economic growth", he added.

Saudi's foreign minister Adel al-Jubeir said to U.S. broadcaster Fox: "This was an operation that was a rogue operation".

J.P. Morgan said it raised its 2019 Brent price forecast by a whopping $20.50 per barrel to $83.50 saying this "bullish argument is strongly driven by tighter supply due to Iranian sanctions and declining spare capacity".

The American Petroleum Institute is scheduled to release data on U.S. crude stockpiles on Tueday afternoon, followed by more comprehensive report by the U.S. Department of Energy on Wednesday. Even still, the outlook for next year is "very unpredictable" in terms of both supply and demand, Al-Falih said.