Iranian Minister of Petroleum Bijan Zangeneh underlined oil market’s concerns about the inability of Saudi Arabia and Russia to offset shortages caused by eliminating Iran from the market in the wake of US sanctions on Tehran on November 4, saying, “Rising oil prices heavily impact the global economy.”
Bijan Zangeneh, speaking ahead of impending US sanctions on Tehran expected by November 4th, told Shana about whether members of the Organization of the Petroleum Exporting Countries (OPEC), along with non-OPEC producers, had the ability to offset supply shortages caused by eliminating Iran from the market, saying, “As I have repeatedly said, there is no replacement for the Iranian oil in the market; Saudi Arabia and Russia’s output is now near their highest levels ever, and the two countries have no spare capacity to pump more oil in the market to replace Iran’s supplies.” Pointing out that Saudi Arabia had been able to supply more than 500,000 barrels of oil from May to September by tapping its stockpiles, the official said the total increase in oil production by other OPEC members during the period was only 105,000 b/d, meaning OPEC members were not able to jack up their output above the current levels.
The Minister further touched on Russia’s oil production, saying the country’s output grew 388,000 b/d in September compared to May, the highest level ever for Moscow; that is to say that Russia would not be able to produce more oil than the current levels without investing in its upstream industries.
He further argued that the inability of Saudi Arabia and Russia to make up for the expected Iran disruption had concerned the market. “The market’s knowledge of this inability has raised the prices as the average price of WTI and Brent crudes have reached from around $67 and $77 [respectively] in May to $74 and $84 in October.”
The Iranian Minister of Petroleum said oil prices had slowed down the economic growth of most of the consumer countries, “which is affecting the global economy.”
Saudi Arabia, a signatory of the OPEC-Non-OPEC agreement to cut production, has increased its oil production in breach of the historic pact. “I believe this violation has been carried out under Washington’s pressure on the Saudi ruling body,” said the Iranian Minister of Petroleum.
He also said that non-OPEC producers were unable to offset disruptions in the market as well, saying: “The have no such ability. According to the estimates of OPEC Secretariat, oil production in these countries, excluding Russia, has increased by only 66,000 b/d in the period between May to September.
Zangeneh again emphasized that the oil market in unable to replace Iranian oil and advised US President Donald Trump to forgo imposition of sanctions on Iran’s oil exports.