Saudi Arabia will coordinate with other crude producers to ensure that adequate supplies are available and the market “does not go out of balance,” Saudi Arabian Minister of Energy and Industry Khalid al-Falih said, after the US ended waivers for buyers of Iranian oil.
The Saudi Arabians are closely monitoring oil market developments after the US announcement regarding export sanctions on Iran, al-Falih said in a statement.
“In the next few weeks, the Kingdom will be consulting closely with other producing countries and key oil consuming nations to ensure a well-balanced and stable oil market, for the benefits of producers and consumers as well as the stability of the world economy,” he said.
Any nation continuing to buy Iranian oil will face US sanctions, US Secretary of State Michael Pompeo said on Monday after announcing that temporary waivers granted to some nations late last year would not be renewed when they expire next month.
The current set of waivers — issued to Taiwan, Greece, China, India, Italy, Japan, South Korea and Turkey — are to expire on Thursday next week.
Taiwan, Italy and Greece have stopped importing Iranian oil since November last year.
Saudi Arabia and the United Arab Emirates (UAE) would ensure an “appropriate supply” of oil along with the US, Pompeo told reporters in Washington.
“Saudi Arabia and others in OPEC will more than make up the Oil Flow difference in our now Full Sanctions on Iranian Oil,” US President Donald Trump said on Twitter.
Saudi Arabia and the UAE can increase their combined production by about 1.5 million barrels a day within a short period, people with knowledge of the situation said, asking not to be identified because the matter is confidential.
Iran shipped about 1.1 million barrels a day of crude and condensate in the first two weeks of this month, tanker-tracking data compiled by Bloomberg show.
OPEC and allied producers such as Russia “could easily come in and fill the gap caused by any reduction in Iran exports,” Ashley Petersen, senior oil market analyst at Houston-based Stratas Advisors LLC, said in an interview with Bloomberg television.
The elimination of waivers would probably remove about 700,000 to 800,000 barrels a day from the oil market in the near term, RBC Capital Markets said.
Analysts at Goldman Sachs Group Inc estimated that it could cause Iran’s production to decline by 900,000 barrels from current levels.
Saudi Arabia is to assess the impact of the US decision on the oil market before raising output, one of the people said.
The biggest producer in OPEC can pump an additional 1 million barrels a day within a short period, the person said.
Saudi Arabia produced 9.82 million barrels a day last month, according to data compiled by Bloomberg.
The UAE can increase output to 3.5 million barrels a day from a current level of 3.045 million, one of the people said.
OPEC and allied suppliers, including Russia, agreed to limit their production until the end of June to buttress crude prices and avert a glut.
They are due to meet next month to assess the market and again in June to decide whether to extend the cuts.
Additional reporting by AP
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