Tabnak – While going ahead with its plan to totally stop Iran’s oil exports by November, the United States counts heavily on its allies in the Persian Gulf, especially Saudi Arabia to fill the gap in the energy market. However, Riyadh’s real potential to undertake such a task is highly questionable.
Reuters in a report quoted estimates by the International Energy Agency (IEA) as showing that Saudi Arabia would have to pump an extra volume of at least 1 million barrels per day (bpd) to make up for the missing Iranian oil supplies once American sanctions are re-imposed against the country.
The report added that the kingdom had sufficient spare capacity to fill the gap created as a lack of supplies from Iran. However, it warned that this would leave the global market with less than 1 million bpd of capacity left to meet all other contingencies.
“In practice, some analysts think the market could be much tighter, with sanctions essentially using up all the spare capacity worldwide,” Reuters wrote. It further emphasized that there were serious doubts about Saudi Arabia’s ability to keep its oil production beyond the current levels.
Based on IEA estimates, the kingdom can raise production to just over 12 million bpd and sustain it at that level for an extended period, the report added. However, it has not produced more than 10.42 million bpd on an annual basis or 10.63 million bpd in a single month in the last 20 years.
“It is possible the kingdom could lift production by another 1.3 million-1.4 million bpd beyond anything it has ever produced before but at the moment there is no way of knowing for certain,” Reuters added. Experts are also doubtful if Saudi Arabia can mobilize its forces rapid enough to boost its oil production and specifically maintain the rise over a long period of time.
Meanwhile, Iran’s Petroleum Minister Bijan Zanganeh says there has been no major change in the country’s production and export of crude oil despite recent threats by US President Donald Trump to halt the oil trade activities of the Islamic Republic. Zanganeh added that Iran had already devised a plan to counter Trump’s threats, and that the plan was working successfully.
He further said that anti-Iran efforts by the US president were largely to blame for the high oil prices in international markets. The Iranian minister also criticized Trump’s pressure on Saudi Arabia to increase its supplies and said such efforts would destabilize markets.
Zanganeh said that exerting pressure as such was against the principles of the Organization of the Petroleum Exporting Countries (OPEC) in which both Saudi Arabia and Iran are founding members.
Trump recently said that Saudi Arabia had agreed to increase oil production by up to 2 million barrels per day (bpd) to moderate high prices. This is already seen as part of a political campaign by the US to pressure the kingdom to ramp up oil production quickly to make up for the loss of Iranian barrels which the Trump administration has threatened to bring down to zero.
