Saudis willing to meet all orders from ex-Iran oil buyers
DUBAI (Bloomberg) -- If you have had to stop buying oil from Iran, Saudi Arabia has you covered, for June, anyway.
The world’s biggest oil exporter has received moderate requests from customers for shipments next month, including from former buyers of Iran’s oil, according to a Persian Gulf person familiar with Saudi plans, who asked not to be identified because the matter is confidential.
Saudi oil production for June is expected to remain below the kingdom’s ceiling under an agreement between the Organization of Petroleum Exporting Countries and its allies limiting output until the end of next month, the person said. Saudi Arabia pumped about 9.8 million barrels a day in March and April and has an OPEC quota of 10.311 million.
The kingdom will continue to export less than 7 MMbopd in June, the person said.
OPEC+, as the producer coalition is known, will respond to any actual shortage once it materializes by increasing supply, the person said. Saudi Energy Minister Khalid Al-Falih said last month that he sees no need to take immediate action in the oil market, signaling a cautious response to the U.S. decision to tighten sanctions on Iran.
Regional tensions
Washington’s May 2 announcement that it wouldn’t renew waivers permitting imports of Iranian oil marked a reversal from last November. At that time, the U.S. blindsided Saudi Arabia by granting the waivers as it sought to damp fuel prices ahead of mid-term Congressional elections.
Crude prices have been bolstered as exports from several suppliers including Iran face disruption. Geopolitical tensions in the oil-rich Gulf have also intensified as the U.S. sent an aircraft carrier strike group to the region and Iran threatened to resume uranium enrichment beyond agreed limits.
Riyadh is treading a fine line between keeping its key U.S. ally happy while preserving OPEC+ unity. To prevent a possible spike in crude, Washington expects Saudi Arabia and other OPEC members to help make up for anticipated losses in Iranian exports.
At the same time, Saudi Arabia is leading OPEC+ in cutting supplies to try to buttress crude and avert a glut. If the kingdom boosts production sharply to offset missing Iranian barrels, it will have a hard time persuading others to limit output. OPEC, including Iran, plans to meet in June to decide whether to extend their production curbs into the second half of the year.
