The Saudi state-run oil company Aramco (short for Saudi Arabian Oil Co.) is warning its potential buyers that they are running low on the most popular crude in October 2018, a month before the US is to impose sanctions on the sale of Iranian oil, amid higher-than-expected demand, as the Wall Street Journal reported, citing sources close to the situation. One buyer revealed that he’s been offered the company’s less popular types of oil.
Aramco is also said to lack the capacity to fill in for Iran’s oil in the long term once Tehran, currently producing around 1.9 million barrels per day, is banned from exporting oil, the outlet added.
According to the outlet, this could increase oil prices, pulling them past $80 a barrel, which would impact US consumers.
“We are heading to a price spike, likely $90 to $100. It’s not just Iran that will suffer. It’s going to have a boomerang effect with rising gasoline prices,” an unnamed oil trader told the outlet.
Saudi Arabia is reportedly the only oil producer able to adjust its production. Although Donald Trump stated that King Salman from Saudi Arabia told him that the kingdom could boost its output to 12 million barrels a day, which is needed to cover Iranian oil exports, a senior US official, cited by the media, said that Riyadh wouldn’t be able to produce this amount.
Saudi Arabia is expected to take the issue of balancing the market at the upcoming summit of the Organization of the Petroleum Exporting Countries (OPEC). According to sources, the Joint-OPEC-non-OPEC Ministerial Monitoring Committee (JMMC) will gather in Algeria to discuss possible recommendations to further increase oil production on September 23. However, Iran, OPEC’s third-largest producer, pledged to block any supply spike, saying that the US is to blame for the price jump.