TEHRAN: On the eve of renewed sanctions by Washington, an Iranian protester burns a dollar banknote during a demonstration outside the former US embassy in the capital yesterday. — AFP

TEHRAN: With Washington poised to curtail Iran's oil exports, OPEC heavyweight Saudi Arabia and its partners stand ready to ramp up supplies even as market conditions remain uncertain, analysts say. The renewal of sanctions on the Islamic republic comes at a time of major supply disruptions in several producer nations and as US President Donald Trump aims to prevent an oil price hike. Analysts expect that Iran's oil exports, which reach around 2.5 million barrels per day in normal times, to plunge by one million to two million bpd when sanctions take effect on Nov 5.

That is expected to strain an already tight market. Outages in Libya, Venezuela, Nigeria, Mexico, Angola and others forced OPEC and non-OPEC producers in June to abandon an agreed cut in output and boost supplies. "We are entering a very crucial period for the oil market," the International Energy Agency said in a September report. "Things are tightening up."

Saudi Arabia is the only producer with significant spare capacity of around two million bpd that can be tapped into to compensate for the loss of Iranian supplies. The kingdom has been under scrutiny after Saudi journalist Jamal Khashoggi - the former royal court insider-turned-critic - was killed in his country's consulate in Istanbul in October. Even as relations soured between the West and Riyadh over the murder of the Washington Post contributor, Saudi Arabia said it had no plans to wage a retaliatory oil embargo.

Saudi Energy Minister Khalid Al-Falih said his country, which raised output by 700,000 bpd to 10.7 million bpd in October, was prepared to further bump up production to 12 million bpd. "We have sanctions on Iran and nobody has a clue what Iranian exports will be," he told the Russian news agency Tass last week. In addition, there are potential declines in Libya, Nigeria, Mexico and Venezuela, he said, also pointing to uncertainty over US shale oil production. Falih said the kingdom could turn to its huge strategic reserves of around 300 billion barrels to meet global demand.

Anas Al-Hajji, a Houston-based oil expert, said the fall in Iranian exports was tough to assess but he expected "less than what most analysts are talking about". "The Iranians have perfected their game working under sanctions. There will be a black market for Iranian crude," Hajji told AFP. Saudi Arabia's neighbors the United Arab Emirates and Kuwait can also raise their output by up to 300,000 bpd if needed.

Kuwaiti oil expert Kamel Al-Harami said he doubts Riyadh can sustain production of 12 million bpd for a prolonged period. "It is very unlikely... They never even did 11 million bpd on a sustainable basis... Its unsustainable," Harami said. OPEC is constrained by low spare capacity in a tight market under threat from unplanned outages, low investment and unpredictable geopolitical unrest. Iranian officials are betting on the unstable market conditions to beat US sanctions. "Mr Trump both tries to decrease Iran's oil exports significantly and also wants prices not to go up. These two can't happen together," Iranian Oil Minister Bijan Namdar Zanganeh said late September.

Tehran sold oil to private buyers through its energy exchange for the first time on Oct 28, as part of efforts to counter the imminent return of sanctions. Some estimates show Iran's crude exports have already dropped by a third since May with even companies from traditional clients China and India abandoning purchases. Hajji said he believes the market is well-supplied and that Saudi Arabia does not need to exceed production of 11 million bpd. "They (Saudi) have 12 million bpd capacity, but there is no need for Saudi Arabia to use all its spare capacity," he said. "People forget that demand declines in the first quarter relative to the fourth quarter, and the IEA expects a one million bpd decline," Hajji said.

Meanwhile, thousands of Iranians chanting "Death to America" rallied yesterday to mark the anniversary of the seizure of the US Embassy during the 1979 Islamic Revolution and the imminent re-imposition of US sanctions on Iran's oil sector. Students attending the government-organized rally in the capital Tehran, broadcast live by state television, burned the Stars and Stripes, an effigy of Uncle Sam and pictures of President Donald Trump outside the former embassy compound.

Hardline students stormed the embassy on Nov 4, 1979, soon after the fall of the US-backed shah, and 52 Americans were held hostage there for 444 days. The two countries have been enemies ever since. State media said millions turned out for rallies in towns and cities, swearing allegiance to the clerical establishment and Supreme Leader Ayatollah Ali Khamenei. The figure could not be independently confirmed by Reuters.

Mohammad Ali Jafari, commander of the Revolutionary Guards, addressed the crowd from the grounds of the former embassy, now known as the "den of spies". He said "economic warfare" was a final bid by Washington to overthrow the Islamic republic after decades of failed attempts. "With God's help and the resistance and perseverance of the pious and revolutionary people of Islamic Iran, this last weapon of the enemy - the economic war - which is accompanied by America's widespread media operation against the nation of Iran, will be defeated," Jafari said. "Never threaten Iran," he warned Trump, describing him as America's "strange president".

Rallies are staged on the embassy takeover anniversary every year. But rancor is especially strong this time round following Trump's decision in May to withdraw from world powers' 2015 nuclear deal with Iran and re-impose sanctions on Iran. The deal brought about the lifting of most international financial and economic sanctions on Iran in return for Tehran curbing its disputed nuclear activity under UN surveillance. Trump said the deal was weak and favored Iran. The other signatories - Britain, France, Germany, Russia and China - remain committed to the accord.

The Iranian military said it would launch two days of air defense drills today and assured Iranians that it could neutralize any threats, the state news agency IRNA reported. "We can assure our people that the enemy will not be able to carry out its threats against our country," IRNA quoted Habibollah Sayyari, the coordinating officer, as saying. - Agencies