Iran oIl sanctIons: saudI ready to boost supplIes

dubai — With Washington poised to curtail Iran’s oil exports, Opec heavyweight Saudi Arabia and its partners stand ready to ramp up supplies even as market conditions remain uncertain,

The renewal of sanctions on the Islamic republic comes at a time of major supply disruptions in several producer nations and as US President Donald Trump aims to prevent an oil price hike.

Analysts expect that Iran’s oil exports, which reach around 2.5 million barrels per day (bpd) in normal times, to plunge by one million to two million bpd when sanctions take effect on November 5.

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,” the International Energy Agency (IEA) said in a September report. “Things are tightening up.”

Saudi Arabia is the only producer with significant spare capacity of around two million bpd that can be tapped into to compensate for the loss of Iranian supplies.

Saudi Energy Minister Khalid Al Falih said his country, which raised output by 700,000 bpd to 10.7 million bpd in October, 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 Tass last week.

In addition, there are potential declines in Libya, Nigeria, Mexico and Venezuela, he said, also pointing to uncertainty over US shale oil production.

Al Falih said the kingdom could turn to its huge strategic reserves of around 300 billion barrels to meet global demand.

Anas Al Hajji, a Houstonbased oil expert, said the fall in Iranian exports was tough to assess but he expected “less than what most analysts are talking about”. “The Iranians have perfected their game working under sanctions. There will be a black market for Iranian crude,” Hajji said.

Saudi Arabia’s neighbours the UAE and Kuwait can also raise their output by up to 300,000 bpd if needed.

Kuwaiti oil expert Kamel Al Harami said he doubts Riyadh can sustain production of 12 million bpd for a prolonged period. —