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OPEC Cuts have Boosted Spare Capacity Over 4mbpd

OIL

Crude output cuts this year have boosted OPEC spread production capacity to the biggest in more than a decade except for during the covid driven demand decline according to Bloomberg.

  • OPEC spare capacity will be more than 4mbpd this year and in 2024 and about 4% of global supplies according to the US EIA.
  • The relatively muted price response could be due to a current limited threat to oil supplies from Middle East tensions but it may also reflect the impact of spare OPEC capacity according to Bloomberg.
  • The ability for OPEC members to access the spare capacity remains unclear.
  • The UAE has been working on a capacity increase from 4mb/d to 5mb/d by 2027 while Saudi is looking to expand its production capacity from 12mb/d to 13mb/d by 2027.

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