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.
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. Al Falih said the kingdom could turn to its huge strategic reserves of around 300 billion barrels to meet global demand., a BBC report 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.
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. In addition, there are potential declines in Libya, Nigeria, Mexico and Venezuela, he said, also pointing to uncertainty over US shale oil production.
Opec is constrained by low spare capacity in a tight market under threat from unplanned outages, low investment and unpredictable geopolitical unrest.
Iranian officials are betting on the unstable market conditions to beat US sanctions. Tehran sold oil to private buyers through its energy exchange for the first time on October 28, as part of efforts to counter the imminent return of sanctions.
Some estimates show Iran's crude exports have already dropped by a third since May with even companies from traditional clients China and India abandoning purchases.(UNI)