London — Saudi Arabia is not in a hurry to increase its oil production, even with the looming expiry of Iran sanctions waivers next week, as energy minister Khalid al-Falih on Wednesday said the market is "well supplied." Speaking at a conference in Riyadh, Falih said Saudi Arabia would only boost supplies according to customer requests.
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"We will be responsive, and we think there will be an uptick in real demand but certainly we are not going to be pre-emptive and increase production," Falih said, according to news reports.
Saudi crude production in May would have "very little variation" from the last few months, he added. June export volumes will be allocated in early May.
Saudi Arabia, the world's largest crude exporter, said it pumped 9.79 million b/d in March, well below its quota under the OPEC/non-OPEC supply accord of 10.31 million b/d.
This is a change in tack from last summer, when Saudi Arabia ramped up its production to a record high of above 11 million b/d by November in response to US pressure to keep the market well-supplied ahead of that month's re-imposition of sanctions on Iran.
But then having been burned by the US' subsequent issuance of waivers to eight countries to continue purchasing Iranian oil, which helped tank prices towards the end of the year, Gulf OPEC officials say they are proceeding more cautiously this time.
"Our intent is to remain within our voluntary production limit, but be responsive to our customers, especially those who have been under waivers and those whose waivers have been withdrawn," Falih said.
The US announced Monday that it was not renewing the sanctions waivers and said it was coordinating with Saudi Arabia and the UAE on preventing an oil supply squeeze.
Iran's crude exports have averaged around 1.2 million to 1.3 million b/d over the last few months. US officials have said their sanctions, intended to impose "maximum economic pressure" on Tehran, aim to bring those down to zero, though analysts say they expect some exports to continue.
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