U.S. sanctions on Iran won’t necessarily translate into a global shortage of oil, according to Nigerian Petroleum Minister Emmanuel Ibe Kachikwu.
“Everybody assumes that once they put the sanctions on Iran, you’re going to lose that production,” Kachikwu said in Cape Town, appealing for patience until there’s more clarity on the impact of the penalties. Iran, OPEC’s third-largest producer, has seen exports slide almost 40 percent since April — the month before Washington announced the curbs.
Although supply concerns drove crude prices to a four-year high last month, they have since faded on speculation the U.S. will soften the blow of sanctions to lower pump prices at home. The Organization of Petroleum Exporting Countries has also pledged to offset any supply gaps. The group, led by Saudi Arabia, will gather in Abu Dhabi this weekend to discuss its options as it faces a fresh surge of U.S. shale oil on the market in 2019.
Aside from U.S. production growth and Saudi spare capacity, even Nigeria could produce more with the help of some additional infrastructure, Kachikwu told reporters at the Africa Oil Week conference. The minister cautioned against being “deceived into believing” more oil is needed, saying that could result in tumbling prices.
“This is not the first time Iran has been through sanctions,” Kachikwu said. “It might not be that they have the capacity to be able to continue that production” at 100 percent capacity, but they also won’t drop to 30 percent either.
The minister said he will wait for OPEC’s ministerial meeting in December in order to get all the facts and figures before deciding on his view.