Will Saudi Arabia be unable to supply oil to the world?
(Baonghean.vn) - In the long term, Saudi Arabia will not be able to meet the demand for high-quality petrochemicals, in the context that Iran will reduce the supply of hydrocarbon materials right after US President Donald Trump announced the imposition of sanctions on Tehran - the third largest oil producer of OPEC (Organization of the Petroleum Exporting Countries).
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| Saudi Arabia is currently the world's largest oil producing country. |
Saudi Aramco, the national oil company, has warned that it will supply limited amounts of oil to the market in October. The reason lies in the fact that the company underestimated the growth potential of hydrocarbon demand before sanctions from Tehran. In the long term, Saudi Aramco will not be able to meet the market's oil demand if Iran stops all supplies.
As the leading country of OPEC, as well as one of the world's largest oil producers and exporters, every decision of Saudi Arabia can greatly affect the global oil market.
Many observers predict that this will lead to a spike in world oil prices to $90-$100/barrel. At that time, the US will also be affected, having to increase domestic retail prices for petroleum products.
Iran will veto any OPEC decision that threatens its oil interests. Earlier last month, Tehran warned OPEC that no member country should be allowed to take away another country’s [meaning Iran’s] share of exports, after Saudi Arabia offered to supply more oil to compensate for cuts in Iranian oil sales to the US.
Previously, in May 2018, the US unilaterally withdrew from the Iran Nuclear Agreement (P5+1) despite Iran's objections and efforts by other countries to maintain the agreement. A series of sanctions against Iran applied by President Trump have caused difficulties not only for the "world's third oil supplier", but also for countries that directly buy oil from Iran.
In order to compensate for Iran's oil supply on the world market, the US has called on other oil producers such as Saudi Arabia, Russia and other OPEC countries to increase oil production to keep supplies stable.