Petroleum and Mineral Resources Minister Ali Al-Naimi said oil markets would remain well supplied even after fresh international sanctions against Iran take effect, as global crude oversupply is already as much as 1.5 million barrels per day (bpd).
“There is a surplus oil in the market. There is surplus supply,” he told reporters in Tokyo after holding talks with Japanese officials about energy supplies.
US and European Union sanctions on Iran’s oil exports take effect in June and July.
When asked if he saw oil supplies tightening in coming months as global sanctions against Iran come into effect, Al-Naimi said: “Absolutely not.”
He said: “There is today about 1.3 to 1.5 million barrels per day (bpd) of extra supply over demand.”
The Organization 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 is pumping around 10 million barrels per day (bpd) and is storing 80 million barrels to meet any sudden disruption in supplies, Al-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.
The US, Britain and France have discussed a release from oil reserves to help prevent fuel prices choking economic growth in a US election year.
Al-Naimi said it was up to developed nations to decide whether to release oil from their strategic reserves.
“That’s their decision,” he said.