SAUDI ARABIA READY TO BOOST OUTPUT
Renewal of US sanctions may trim Iran’s oil exports by up to 2m barrels a day, further straining already tight market
WITH Washington poised to curtail Iran’s oil exports, the Organisation of the Petroleum Exporting Countries (Opec) heavyweight Saudi Arabia and its partners stand ready to ramp up supplies even as market conditions remain uncertain, say analysts.
The renewal of sanctions on the Islamic republic comes at a time of major supply disruptions in several producer nations and as United States President Donald Trump aims to prevent an oil price hike.
Analysts expect that Iran’s oil exports, which reach 2.5 million barrels per day (bpd) in normal times, to plunge by one million to two million bpd when sanctions take effect today. That is expected to strain an already tight market.
Outages in Libya, Venezuela, Nigeria, Mexico, Angola and others forced Opec and non-Opec producers in June to abandon an agreed cut in output and boost supplies.
“We are entering a very crucial period for the oil market,” said the International Energy Agency in a September report. “Things are tightening up.”
Saudi Arabia is the only producer with significant spare capacity of two million bpd that can be tapped to compensate for the loss of Iranian supplies.
The kingdom has been under scrutiny after Saudi journalist Jamal Khashoggi was killed in his country’s consulate in Istanbul last month.
Even as relations soured between the West and Riyadh over the murder of the Washington Post contributor, Saudi Arabia said it had no plans to wage a retaliatory oil embargo.
Saudi Energy Minister Khalid al-Falih said his country, which raised output by 700,000 bpd to 10.7 million bpd last month, was prepared to further bump up production to 12 million bpd.
“We have sanctions on Iran and nobody has a clue what Iranian exports will be,” he told the Russian news agency last week.