Saudi Arabia’s concern is to keep the global oil market well supplied, its deputy oil minister said on Thursday, as top Asian crude buyers look to the world’s biggest producer to make up for cuts in supplies from sanctions-hit Iran.
Saudi Arabia is the only oil producer with significant spare capacity to replace a fall in supply from its regional rival Iran, which is facing Western sanctions aimed at crippling its contentious nuclear program.
China, India and Japan, the top three buyers of Iranian oil, together buy about 45 percent of Tehran’s crude exports and all of them are planning cuts of at least 10 percent.
In addition to Japan, South Korea is seeking to be exempt from U.S. sanctions, which means Seoul would also have to cut back on Iranian purchases.
“This is not an issue for us. We are concerned with maintaining the market well supplied, and that has always been our endeavor,” Abdul Aziz Bin Salman bin Abdulaziz said, referring to the oil embargo on Iran.
When asked if oil prices will rise further if supplies from Iran drop, the Saudi minister, in New Delhi on an official visit, said: “We don’t engage ourselves in any of these discussions.”
Abdulaziz said his country’s current spare capacity was 2.5 million barrels per day (bpd), while production was 9.8 million bpd.
India’s junior oil minister said he had discussed with Abdulaziz buying more crude from Saudi Arabia.
While India has said it will not implement the sanctions, its refiners are seeking higher volumes under term deals from Saudi Arabia.
King Abdullah of Saudi Arabia offered additional barrels to India earlier this month after Oil Minister Ali al-Naimi said Riyadh could increase production by about 2 million barrels per day (bpd) almost immediately.
Saudi Arabia supplied an extra 3 million barrels to Indian customers in August, stepping into the vacuum created by Iran after it cut supply to New Delhi after a long-standing clearing house mechanism was scrapped in December 2010.