"We are working to minimize disruptions to the global market, but we are confident there is sufficient global spare oil capacity".
Oil was mixed on Thursday, with USA crude slipping and Brent futures little changed after data showed an unexpected build in US crude oil stockpiles.
Oil prices have edged higher in recent months, as the Trump administration has pushed allies to end all purchases of oil from Iran following the United States pulling out of the nuclear deal between Tehran and world powers, with ongoing unrest in Venezuela, as well as with fighting in Libya over control of that country's oil infrastructure.
Secondly, a higher production by Saudi Arabia not necessarily would translate into higher global production since it is already declining in Libya, Nigeria, and Venezuela amid expectations that exports from Iran would decline, once the sanctions set in. Two months ago, President Donald Trump pulled the United States out of the landmark 2015 nuclear deal that lifted crippling economic sanctions on Iran in exchange for curbs on its nuclear programs.
Trump's aim may be to exert maximum pressure on Iran while at the same time not upsetting potential US midterm voters with higher gas prices, said Antoine Halff, a Columbia University researcher and former chief oil analyst for the International Energy Agency.
FXTM's Otunuga took a more bearish stance on the direction of oil prices.
Saudi Arabia will have to navigate a particularly delicate balance between chasing buyers and charging more for its crude when setting monthly prices for its biggest customers this week. With India begrudgingly willing to entirely withdraw from Iranian oil, the Chinese are less likely to bow to U.S. pressure.
Yuan-denominated futures were little changed at 497.6 yuan a barrel on the Shanghai International Energy Exchange, after losing 1.4 per cent Wednesday.
A source last week told Reuters Saudi Arabia produced 10.8 million bpd in June and it aimed to pump 11 million bpd in July. If confirmed by government data Thursday, that would be the seventh consecutive drop.
However, fears that Trump had persuaded the Saudis to up production were stoked by a tweet which send oil markets tumbling. This must be a two way street.
The White House said Saturday that King Salman had promised President Donald Trump that he would raise oil production if needed.
"As soon as market participants realize that there is no more scope for further production increases, prices will continue to rise - and will do so noticeably", he said.
Meanwhile in other oil-market news, state-owned Saudi Aramco said it will change its Asia crude-pricing benchmark by replacing Platts' Oman assessment with the Dubai Mercantile Exchange's Oman futures from October 1.
"US oil diplomacy has at points in the past been highly successful in calming oil markets, and it has generally been more successful the quieter it has been", the analysts wrote.
Hook said State Department and Treasury officials are traveling around the world meeting with US allies to try to persuade them to cooperate with the sanctions.