Saudi Arabia’s crown prince in an interview with Bloomberg News is insisting that the kingdom is fulfilling promises to the United States to make up a shortfall in world oil supplies resulting from the loss of Iranian production under U.S. sanctions.
"The request that America made to Saudi Arabia and other OPEC countries is to be sure that if there is any loss of supply from Iran, that we will supply that," Muhammad Bin Salman, heir to the Saudi throne, told Bloomberg in an interview published on October 5. "And that happened."
Salman said a coalition of producers from OPEC has recently boosted output by 1.5 million barrels a day, which is double the 700,000-barrel decline in output experienced so far by Iran under the threat of U.S. sanctions on its oil sector, which are due to take effect on November 5.
"We export as much as two barrels for any barrel that disappeared from Iran recently," the prince said. "So we did our job and more."
Yet that hasn't stopped U.S. President Donald Trump from continuing to blame the Organization of Petroleum Exporting Countries for a sharp rise in prices this year, even as his administration vows to choke off all of Iran's oil exports.
The increased production also failed this week to prevent premium crude prices from hitting a four-year high above $86 a barrel in London trading.
Oil traders say they are concerned that the kingdom isn’t ramping up output quickly enough, and that it may not have enough capacity to fully cover Iran’s losses.
Saudi Arabia is now pumping about 10.7 million barrels a day -- close to a record -- and can add a further 1.3 million "if the market needs that," Salman told Bloomberg.
However, some analysts doubt that 12 million barrels a day can be reached quickly, or maintained for an extended period.
"Near-term spare capacity is effectively maxed out," said Amrita Sen, chief oil analyst at consultant Energy Aspects Ltd.
The Saudi prince claimed in the Bloomberg interview that the kingdom could push its capacity beyond 12 million barrels a day with additional investment, and that extra supplies are also available from its allies in the Persian Gulf region.
The so-called OPEC+ coalition includes other Gulf producers like the United Arab Emirates, as well as countries outside OPEC such as Russia. However, Russia, which rivals the Saudis as a top global producer, does not support the U.S. sanctions against Iran and has vowed to help Iran get around them and keep exporting oil.
Trump announced he would reimpose U.S. economic sanctions on Iran in May after walking away from Tehran's 2015 nuclear deal with world powers. But Russia, China, and the three European powers that also signed the deal have continued to honor it and are working with Iran on ways to evade the U.S. sanctions.
Russian President Vladimir Putin, like Iran, has blamed Trump’s abandonment of the nuclear deal for the sharp rise in oil prices this year.
The Saudis, by contrast, are bitter rivals with Iran in the Middle Eastern region and applauded Trump's decision to quit the nuclear deal. Trump at the time said he expected the Saudis and other Gulf allies to make up the shortfall in Iranian production that would result from the sanctions.
Iran's oil output reached a peak of about 4 million barrels a day after global sanctions were lifted in 2016 in exchange for curbs on its nuclear activities under the nuclear deal. But its output has declined sharply in recent months under the threat of U.S. sanctions.
The Saudi prince contended in the Bloomberg interview that the most recent sharp rise in prices to over $80 a barrel is actually being driven by output losses in other countries, not Iran.
"The higher price that we have in the last month, it’s not because of Iran," he said. "It’s mostly because of things happening in Canada and Mexico, Libya, Venezuela, and other countries."
On a related matter, Reuters reported on October 5 that Indian crude importers intend to keep buying oil from Iran in November after U.S. sanctions go into effect and are seeking a waiver from the sanctions from Washington.