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OPEC+ Cuts Output Amid Rising Spare Capacity: HSBC

OIL

With the latest extra supply cut OPEC+ has used up the group’s “last bullets” as it faces rising spare capacity, HSBC said in a note.

  • OPEC+ is lacking an exit strategy to unwind the reductions, the bank said.
  • The current OPEC cuts are estimated to lead to a market deficit of 0.9mbpd in the first quarter of 2024.
  • Spare capacity is ballooning despite a rebound in oil demand, the bank said.
  • OPEC spare capacity is expected to rise to around 5.5mbpd in Q1 2024 from 5mbpd currently, assuming a 50% compliance with the new cuts.
  • OPEC+ spare capacity is expected to rise to more than 6mbpd in Q1 2024, the highest since June.

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