Saudi Arabia isn’t seeing as much demand for oil as expected from Iran’s customers, as a lot of crude has been leaving the Gulf nation without being accounted for since the US imposed sanctions on Tehran.
Nobody knows how much oil Iran is producing or exporting, Saudi Arabian Energy Minister Khalid al-Falih said after the Joint Ministerial Monitoring Committee of Opec and its allies met in Jeddah.
US President Donald Trump earlier this month halted waivers from sanctions for countries that buy oil from Iran. To prevent a possible spike in crude prices, Washington looks to Saudi Arabia and other members of the Organization of Petroleum Exporting Countries to help make up for losses in Iranian exports. The Jeddah talks took place amid flaring political tensions in the Middle East, with Riyadh last week accusing rebels in Yemen of attacking its oil pipeline network.
Iran’s oil output has tumbled more than 30% since last May, data compiled by Bloomberg show, when Trump pulled out of an agreement aimed at limiting the country’s nuclear programme and announced the re-imposition of financial sanctions. Production could plunge further this month, to the lowest level since the Iran-Iraq war of the 1980s, the International Energy Agency predicts. Opec and allied producers are currently bound by output limits until the end of June, when their agreement could either expire or be renewed. Saudi Arabia can raise production by about 500,000 barrels day from last month’s levels, or about 5%, and still remain within its pledged quota. But losses in Iran stand to be much larger, potentially spiralling to 900,000 barrels a day, according to Goldman Sachs Group Inc, and could require a bigger and more contentious surge from the kingdom. This risks straining already tense relations in Opec to a breaking point. Iranian Oil Minister Bijan Namdar Zanganeh warned on May 2 that Opec is headed for a collapse.
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