Riyadh ready to up oil supply over Iran sanctions, Latest Business News - The New Paper

Riyadh ready to up oil supply over Iran sanctions

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DUBAI With Washington poised to curtail Iran's oil exports, Organisation of the Petroleum Exporting Countries (Opec) heavyweight Saudi Arabia and its partners stand ready to ramp up supplies, analysts said.

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 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 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.

Saudi Arabia is the only producer with significant spare capacity of around two million bpd that can be tapped into to make up 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.

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

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

Its neighbours the United Arab Emirates and Kuwait can also raise their output by up to 300,000 bpd if needed. - AFP