Saudi Arabia's announcement on Tuesday comes just over a week since OPEC and non-OPEC producers including Russian Federation agreed to increase production by 1 million barrels per day from the start of this month.
In May, the US retreated from a multilateral deal with Iran regarding its nuclear disarmament program, and imposed sanctions to limit the world's fourth largest oil exporter's access to global markets.
The cabinet commended "constructive cooperation between producing countries from inside and outside OPEC, which resulted in the agreement of 25 countries to increase oil supplies, taking into account the current market conditions".
The 9.1 trillion 2018 budget was predicated on a benchmark price of $51 per barrel and production of 2.3 million barrels per day. On Monday, Hook expressed confidence that the USA sanctions policy would not prompt mass shortages, but analysts have expressed doubt that Saudi Arabia can increase production by as much as Trump described.
Oil prices rose on Friday on worries that United States sanctions against Iran would take away significant volumes of crude oil from world markets while oil demand worldwide increases.
The agreement from Saudi Arabia is surprising as in recent months they have agreed with Russian Federation and other OPEC+ members to keep production relatively low. Oil hesitated at the start of the week, but traders are coming back to the buy side of the table as markets realized Saudi Arabia is in no rush to push oil prices higher again after recently pushing OPEC to lift production limits just last month. "He has agreed", Trump tweeted on June 30.
"Although geopolitical risk factors ranging from suspended oil exports from Libya, falling production in Venezuela and USA sanctions on Iran have supported oil, the oversupply concerns could make a return".
"We are confident that there is sufficient global spare oil production capacity", he added.
Trump's move comes as the world suddenly finds itself dangerously short of meeting rising global demand that's set to hit 100 million barrels per day by the fourth quarter, compared to 98.7 million during the same period previous year.
"Investors should keep in mind that United States shale production remains robust while global trade tensions present a threat for global growth, and this may translate to less demand for commodities. The immediate reaction following the announcement has been negative, with WTI trading around $73.67 (on Tuesday afternoon)".
John Kilduff, founding partner at energy hedge fund Again Capital, said: "You're starting to hear talk of oil shock". NY. "all eyes will be on that Cushing number".
The Cabinet was briefed on Crown Prince Mohammed bin Salman's visit to Russian Federation.
USA light crude was down 40 cents at $73.75.