RIYADH (Reuters) – Saudi Arabia said on Tuesday it would continue to meet customer demand for crude despite looming U.S. sanctions that are expected to reduce oil exports from Iran.
Saudi Energy Minister Khalid al-Falih said at an investment conference in Riyadh that the oil market was in a “good place” and he hoped oil producers would sign a deal in December to extend cooperation to monitor and stabilize prices.
Benchmark Brent crude oil LCOc1 hit an intraday low of $78.32 a barrel, down $1.51, following Falih’s comments. U.S. sanctions on Iranian oil begin on Nov. 4 and Washington has said it wants to stop all of Tehran’s fuel exports.
“We have to continue to monitor the market in the next two to three months,” Falih said.
“We will decide if there are any disruptions from supply, especially with the Iran sanctions looming. Then we will continue with the mindset we have now, which is to meet any demand that materializes to ensure customers are satisfied.”
Oil prices have rallied this year on expectations that the sanctions will strain supplies by lowering shipments from Iran, OPEC’s third-largest oil producer.
Falih said he would not rule out that Saudi oil output would be 1-2 million barrels per day higher than current levels in future as oil demand growth is expected to keep rising. He did not mention a timeline for this.
The minister also said that if oil supply continues to build up, “we will have the mechanism to reconvene … and bring supply and demand in balance and to prevent inventories from growing”.
“It is a very unpredictable situation from supply in particular, but demand also has its uncertainties with the trade frictions,” he said.
He said the Organization of the Petroleum Exporting Countries and its allies hoped to extend their cooperation on oil supply when they meet in December in Vienna.
“It will become an open-ended agreement to continue to monitor (the oil market) and stabilize it,” Falih said.
Reporting by Rania El Gamal, Writing by Alexander Cornwell and Maha El Dahan, Editing by Ghaida Ghantous and Dale Hudson