TODAY.AZ / Business

Global spare capacity of oil is declining

10 October 2018 [10:00] - TODAY.AZ

By  Trend


OPEC capacity can be up to 2 million barrels per day if the Saudi-Kuwait neutral zone is accounted for, the US JP Morgan Bank said in its report obtained by Trend.

However, currently the neutral zone is not contributing to the spare capacity, and available spare capacity is likely to be shy of 1.5 million barrels per day, which is in line with the Saudi Oil Minister’s comments that suggest OPEC spare capacity is around 1.3 million barrels per day, said the report.

"We could still be overestimating the spare capacity of Saudi Arabia at this point given it is already at 10.7 million barrels per day, and currently we expect it can ramp up production to 11 million barrels per day, but some operational difficultly at Manifa and Khurais could curtail those efforts."

JP Morgan believes that anything more than 11 million barrels per day is expected to require up to nine months of production ramp-up.

"Even if Saudi Arabia preempted the tightness from Iran due to US-led sanctions as early as Jun’18 when it announced it will increase production at the OPEC meeting, it would still take us to Mar’19 next year when that additional 1 million barrels per day of capacity could be made available, in our view, and that assumes neutral zone issue being resolved," said the report.

"The Kingdom could use its inventories to help balance the markets, but that is unlikely to keep a lid on prices if there were unplanned outages or disruptions globally or if we had severe cold winters this year."

URL: http://www.today.az/news/business/174701.html

Print version

Views: 463

Connect with us. Get latest news and updates.

Recommend news to friend

  • Your name:
  • Your e-mail:
  • Friend's name:
  • Friend's e-mail: