(Reuters) – Saudi Oil Minister Ali al-Naimi said on Wednesday oil markets would remain well supplied even after fresh international sanctions against Irantake effect, as global crude oversupply is already as much as 1.5 million barrels per day (bpd).
U.S. and European Union sanctions on Iran‘s oil exports take effect in June and July, and are aimed at stemming the flow of petrodollars to Tehran to force it to halt a nuclear program the West suspects is intended to produce weapons.
Iran exports about 2.2 million bpd, mostly to Asia, in a global market of around 89 million bpd.
When asked if he saw oil supplies tightening in coming months as global sanctions against Iran come into effect, Naimi said: “Absolutely not”.
“There is today about 1.3 to 1.5 million barrels per day (bpd) of extra supply over demand,” he told reporters in Tokyo after holding talks with Japanese officials about energy supplies. Japan is a major buyer of Iranian crude.
The Organisation of Petroleum Exporting Countries (OPEC) pumped about 1.3 million barrels per day above its output target in March, according to the group’s monthly report in April.
Saudi Arabia, OPEC’s biggest producer and the world’s top crude oil exporter, is pumping around 10 million barrels per day (bpd) and is storing 80 million barrels to meet any sudden disruption in supplies, Naimi said on Tuesday.
Worries of a supply disruption from the Middle East due to escalating tensions between the West and Iran pushed benchmark Brent crude prices over $128 in March, a gain of over 20 percent from the start of the year.
Prices have since eased but have stayed well above $100, keeping global fuel costs high and threatening to derail the fragile global economic recovery.
Naimi said it was up to developed nations to decide whether to release oil from their strategic reserves. “That’s their decision,” he said.