{"id":35882,"date":"2018-07-11T07:01:51","date_gmt":"2018-07-11T12:01:51","guid":{"rendered":"http:\/\/olduvai.ca\/?p=35882"},"modified":"2018-07-11T07:01:57","modified_gmt":"2018-07-11T12:01:57","slug":"spare-capacity-the-biggest-mystery-in-oil-markets","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=35882","title":{"rendered":"Spare Capacity: The Biggest Mystery In Oil Markets"},"content":{"rendered":"

Spare Capacity: The Biggest Mystery In Oil Markets<\/a><\/h3>\n\"Oil<\/picture>\n
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With around 2.5 million barrels per day (mb\/d) of Iranian supply targeted<\/a> by the Trump administration, how will the oil market cope with the losses? Is there enough supply capacity to make up for the shortfall?<\/p>\n

There is a great deal of debate about the true extent of the world\u2019s spare capacity. Or, more precisely, there are a range of guesses over how much surplus is located in Saudi Arabia, the one country that really has the ability to ramp up large volumes of supply on short notice.<\/p>\n

Saudi Arabia claims it could produce 12.5 mb\/d if it really needed to. However, that claim has not been put to the test. Saudi Arabia\u2019s all-time highest level of production was just over 10.7 mb\/d in 2016, just before it helped engineer the OPEC+ production cuts.<\/p>\n

Adding around 2 mb\/d of extra supply \u2013 as President Trump demands \u2013 is a tall order. \u201cMore recent history shows Saudi has never produced more than 10.6mn b\/d on average over a single month. And even in the recent period, we have observed a steep decline in domestic Saudi oil inventories,\u201d Bank of America Merrill Lynch wrote in a note, arguing that there is plenty of reason to question the notion that Saudi Arabia has around 2 mb\/d of idled capacity. \u201cThus, it appears the oil market has little confidence that Iran volumes can be easily replaced.\u201d<\/p>\n

The International Energy Agency estimates that there is around 1.1 mb\/d of total global spare capacity that can truly be ramped up in a short period of time. A looser definition of spare capacity that encompasses the ability to add supply over several months puts the figure at about 3.4 mb\/d, 60 percent of which is located in Saudi Arabia. Smaller additions come from the UAE, Kuwait, Iraq and Russia.<\/p>\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Spare Capacity: The Biggest Mystery In Oil Markets With around 2.5 million barrels per day (mb\/d) of Iranian supply targeted by the Trump administration, how will the oil market cope with the losses? Is there enough supply capacity to make up for the shortfall? There is a great deal of debate about the true extent […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[3],"tags":[416,433,441,6010,20854,596,5332,600,701],"class_list":["post-35882","post","type-post","status-publish","format-standard","hentry","category-energy-2","tag-iea","tag-international-energy-agency","tag-iran","tag-nick-cunningham","tag-oil-spare-capacity","tag-oil-supply","tag-oilprice-com","tag-opec","tag-saudi-arabia"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/35882","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=35882"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/35882\/revisions"}],"predecessor-version":[{"id":35883,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/35882\/revisions\/35883"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=35882"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=35882"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=35882"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}