Saudi Arabia has a little-known weapon to fight against a disruption in Iranian oil supplies: millions of barrels of stocks strategically located around the world.

Riyadh appears to be filling up its network of storage tanks, gaining flexibility to respond to any disruption.

The kingdom does not disclose data about the level of storage, but there are anecdotal signs of stockpiling, according to western officials. Saudi has been producing 9.8m-10m barrels a day, the highest level in 30 years. Yet, supply to the market – exports and domestic consumption – appears to be a notch below current production, at about 9.4m-9.6m b/d, western officials say. The difference could be heading into storage.

Riyadh stocks crude oil in massive tank farms in the main European trading hub of Rotterdam, near its biggest Asian customers in Japan’s Okinawa and in the Egyptian oil export port of Sidi Kerir. In total, Riyadh has permanent access to about 12m barrels of storage, split among the three locations. In addition, the country could lease storage in the same locations or elsewhere if necessary.

The roughly 12m barrels of storage capacity allow Riyadh, in theory, to manage a 30-days surge in exports of 400,000 b/d releasing stocks without having to boost its production. Because the storage tanks are very close to the main importing countries, the impact of a release would be much larger than the headline number suggests.

The kingdom has used the flexibility of its storage in the past. In March 2011, at the start of the crisis of Libya, Ali Naimi, the veteran Saudi oil minister, disclosed in an interview-cum-statement to the Saudi official news agency that the country had “stored additional quantities of crude oil at various storage facilities and increasing inventories in Sidi Kerir (Egypt), Rotterdam (the Netherlands) and Okinawa (Japan) to better meet any additional call on its production”.

The use of storage would not only allow Riyadh to respond quicker to a disruption in Iranian flows, whether triggered by US and European sanctions or war, but also it would allow it to meet the surge in seasonal demand during the summer without having to ramp up its production. With Riyadh already pumping close to 10m b/d, any further production increase would dangerously approach the kingdom to its maximum capacity of about 11.5m-12.5m b/d. Crude oil prices usually rise when the kingdom’s cushion of spare production falls.

Riyadh most likely would need to increase output this summer to meet a seasonal increase in domestic demand as utilities burn crude to produce electricity for air conditioning and water desalination during the torrid Gulf summer. The rise – needed to sustain export levels and meet domestic demand – could have reduced the cushion of spare production to very low levels. Riyadh instead may keep output more or less unchanged, diverting some supply to domestic needs and meeting some of its export commitments through stocks.