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Sat 14 Jan 2012 11:23 AM

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Saudis have 2.5m barrels spare oil capacity, PFC says

World's largest oil exporter seen capable of filling any gap left from possible Iran sanctions

Saudis have 2.5m barrels spare oil capacity, PFC says
oil, energy, GCC oil, GCC energy, Middle East energy, Middle East oil

Saudi Arabia, the world’s largest oil exporter, is able to boost production to its officially-announced peak of 12.5 million barrels a day, according to PFC Energy.

Proposed European Union sanctions to block imports from Iran have raised the prospect that other suppliers may need to make up any shortfall.

Oil Minister Ali al-Naimi, who has said the kingdom can reach a level of 12.5 million, said last month that it’s pumping at about 10 million a day.

“The market always questions how much spare capacity Saudi Arabia actually has,” Jamie Webster, an analyst at the consulting company, said by phone from Washington.

“Their total productive capacity including the neutral zone is around 12.5 million barrels.”

Saudi Arabia’s sustainable oil production capacity was estimated by the International Energy Agency, in its December 13 Monthly Oil Market report, at 12.04 million barrels a day.

The agency defines this as capacity levels that “can be reached within 30 days and sustained for 90 days.”

“When you talk to people that have a hand in the oil business, the closer you are to a handshake relationship with Saudi Aramco, the more likely you are to believe that they have the 12.5 million barrels,” Webster said.

Iranian Vice President Mohammad Reza Rahimi said on December 27 the country would block the Strait of Hormuz, the transit route for about a fifth of the world’s oil, if the EU bans the country’s oil exports.

An accidental collision between navies amassed in the Strait of Hormuz poses a more likely security risk than Iran delivering on threats to close the waterway, PFC’s Webster said.

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