OPEC has enough spare production capacity to cushion oil markets if the U.S. re-imposes sanctions on Iran, according to United Arab Emirates Energy Minister Suhail Al Mazrouei.
Three members of the Organization of Petroleum Exporting Countries - Saudi Arabia, Kuwait and the UAE - provide an adequate “buffer” of potential output, Al Mazrouei told reporters in Abu Dhabi. He serves this year as OPEC’s president.
“Don’t worry about supply,” Al Mazrouei said. “I don’t think there will be issues as a result of sanctions.”
President Donald Trump announced plans last week to withdraw from the Iran nuclear accord and re-impose US sanctions on OPEC’s third-biggest producer.
Trump’s decision presents a challenge for OPEC and allied suppliers as they cut output to drain a global glut. Their policy of cutting until the end of the year may falter in the wake of Trump’s decision. While it’s still uncertain how much he intends to restrict Iranian oil exports, most analysts predict a decrease.
A US withdrawal from the Iran nuclear accord “could lead to 1 million barrels off the market, which of course would affect things,” BP Chief Executive Officer Bob Dudley said in a separate Bloomberg TV interview in Abu Dhabi. “There’s a lot of uncertainty out there.”
Estimates vary from “little impact” anticipated by Barclays Plc, to a possible loss of more than 50 percent of the country’s 2.7 million barrels of daily shipments predicted by consultant FGE.
Al Mazrouei declined to quantify OPEC’s unused production capacity. “We will meet in June to discuss that.”
OPEC “can find a solution” to offset the impact US sanctions would have on supply, he said. “That’s not what we’re concerned about. What we’re concerned about in the next meeting is, ‘what’s the right level of inventories that we should see’ and ‘can we put this group together for longer?”’
Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.