OPEC has enough spare production capacity to cushion oil markets as the U.S. re-imposes sanctions on Iran, according to United Arab Emirates Energy Minister Suhail Al Mazrouei.
Three members of the Organisation of Petroleum Exporting Countries — Saudi Arabia, Kuwait and the UAE — together have enough capacity, Al Mazrouei said in an interview.
He serves this year as OPEC’s president.
“Don’t worry about supply,” Al Mazrouei told reporters later in Abu Dhabi. “I don’t think there will be issues as a result of sanctions.” OPEC has an adequate “buffer” of potential output, he said.
President Donald Trump announced plans last week to withdraw from the Iran nuclear accord and re-impose U.S. sanctions on OPEC’s third-biggest producer. Trump’s decision presents a challenge for OPEC, Russia 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. It’s unclear how much he intends to restrict Iran’s oil sales, but most analysts predict a decrease.
Russia’s acting Energy Minister Alexander Novak said he plans to discuss the U.S. exit from the Iran accord in more detail with Saudi Energy Minister Khalid Al-Falih during the St. Petersburg International Economic Forum, which runs May 24-26.
The two ministers are leading the effort to pare production and support crude prices. They spoke by phone after Trump’s announcement on Iran, Novak told reporters on Monday in Moscow.
Russia’s largest crude producer, state-run Rosneft PJSC, can boost output by more than 100,000 bpd, the company said in a statement.
Renewed U.S. sanctions on Iran “could lead to 1 MMbbl off the market, which of course would affect things,” BP CEO Bob Dudley said.
“There’s a lot of uncertainty out there.”
Other forecasts vary from “little impact” anticipated by Barclays Plc, to a possible loss of more than 50% of the country’s 2.7 MMbbl 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 U.S. 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?”
Oil windfall expectations from the Middle East crisis