Saudi Arabia, the world's largest oil exporter, is reluctant to fill gap in world oil markets caused by sanctions against Iran, an official from the Persian Gulf state said Monday.

 

"We don't want to replace Iranian oil and we never said we wanted to," the oil official, who asked not to be named, told Dow Jones Newswires.

 

"No-one is happy with the current situation about the Iranian sanctions. Neither the Americans, the Europeans or Asians are pleased with it," he said.

 

Saudi Oil Minister Ali al-Naimi has previously said that the Persian Gulf state isn't seeking to replace Iranian crude should foreign sanctions be imposed on Iran.

 

The kingdom will respond to its customers' demands for more oil but "it doesn't want to get involved in the politics behind the sanctions," the Saudi official clarified Monday.

 

The official's comments come ahead of a meeting this week in Kuwait City attended by Iran oil minister and organized by the International Energy Forum, an independent organization based in Riyadh that works with the Organization of Petroleum Exporting Countries, the International Energy Agency, and transit oil countries.

 

The remarks could be an attempt by Saudi Arabia to avoid confrontation with rival producer Iran after an OPEC meeting in June failed to agree a deal amid bitter discord over whether to up oil production.

 

Saudi Arabia's oil output was 9.8 million barrels per day in February steady with January and is seen continuing at current high levels despite recent efforts by some countries to switch to crude from the kingdom ahead of sanctions on Iran and its exports later this year.

 

Do Saudis have spare capacity?

 

Meanwhile, many astute oil experts have grave doubts about the Saudis much vaunted spare capacity. This is vital because Saudi Arabia is the world's largest producer, and up till now has been able to influence the world price by opening the oil taps.

 

Jeff Rubin -- Canadian economist and author is convinced the Saudi spare capacity is the "fictional variety”. He says reports that producers in OPEC, particularly Saudi Arabia, will able to cover a shortfall in oil production are greatly exaggerated. 
 

“The four million barrels-a-day of excess capacity that Saudi Aramco claims is of the fictional variety.”  

 

Recent past history also tells us the Saudis are pumping flat out. At the height of the 2008 oil price spike George Bush II flew to Riyadh to beg the Saudis to increase production. Result: just a pitiful 300,000 barrels a day extra. 

 

(Source: Agencies)