LONDON - Oil production capacity could fall to under one percent of global oil demand by the end of the year if OPEC compensates falling production from Iran and Venezuela, leaving oil prices exposed to sharp swings in the event of unplanned outages, analysts say.
Very few oil producers hold spare capacity, with Saudi Arabia, the largest producer in the Organization of the Petroleum Exporting Countries, and the world’s biggest oil exporter, holding the lion’s share. While analysts expect Venezuelan production to more or less stabilize at current levels of around 700,000-800,000 bpd for the rest of the year, Iranian oil production is forecast to fall further after as the United States seeks to completely choke off its exports.
“While Saudi Arabia, UAE and other OPEC countries will likely fill the gap created by lower Iranian exports, albeit more reluctantly than last year, it will come at the cost of a significant reduction in the spare capacity and also increase the risks of a potential conflict in the Middle East,” Barclays said in a note.
Energy Aspects forecasts OPEC spare capacity to fall to around 920,000 bpd in the fourth quarter from 2.05 million bpd in the second quarter and 1.4 million bpd in the third quarter. A major Libya disruption would be a massive negative shock and would highlight the spare capacity problem, Fabiani said.
Beginning to think, perpetual problems in middle east and Venezuela, is to keep supply tight. Benefits USA oil industry.
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OPEC in the dark on oil supply as Russia, Iran cut exportsOPEC is in the dark on the oil supply outlook for the second half of this year, ... Looks like it’s going to be an expensive summer. Looks like the same setup to spike oil prices and earn big profits that we saw just prior to the Iraq war. AmericanOligarchy ok ok
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