U.S. and European sanctions targeting Iran's oil revenues are to go into full force July 1. Michael Wittner, global head of oil market research at Societe Generale, was quoted by Bloomberg News as saying Saudi Arabia has only a "very narrow cushion" to protect against any expected oil shortages.
"Saudi production will have to go even higher in the coming months, as sanctions are fully implemented and as refinery crude demand and runs increase seasonally, beginning in May," he said.
Some European countries, along with Japan, have cut back on Iranian crude oil imports by a combined 638,000 barrels per day prompting Riyadh to increase production to 10 million bpd earlier this year.
Wittner said he expected the International Energy Agency to coordinate a release of strategic petroleum reserves around the July deadline but any price relief would be temporary.
Any emergency release of petroleum stockpiles, he said, will "occur against a strongly bullish backdrop of stockdraws and tightening spare capacity."