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Bloomberg
OPEC’s Gulf members may need to pump almost as much crude as they can to cover swelling supply losses from Venezuela to Iran and beyond, the International Energy Agency said.
“Rising production from Middle East Gulf countries and Russia, welcome though it is, comes at the expense of the world’s spare-capacity cushion, which might be stretched to the limit,†the Paris-based IEA said in its monthly report. “This vulnerability currently underpins oil prices and seems likely to continue doing so.â€
Saudi Arabia pledged last month that the kingdom and its allies would increase oil supplies to prevent rallying prices from hurting the global economy. Yet as Venezuela continues to unravel and Trump unleashes aggressive sanctions against Iran, fears that the supply boost won’t be enough are keeping prices near the highest in three years.
Venezuela’s total output capacity could sink below 1 million barrels a day by the end of the year, bringing its overall loss in 2018 to more than 40 percent, IEA said. Iran has seen its shipments to Europe fall almost 50 percent as US penalties deter buyers, and the country’s total exports could slump even more, according to the agency, which advises most of world’s major economies.
As supply losses in the Organization of Petroleum Exporting Countries pile up, its biggest producer, Saudi Arabia, is trying to plug the gap. The kingdom bolstered output by the most in three years last month, increasing by 430,000 barrels a day to 10.46 million a day, according to the agency. If the Saudis raise production to a record 11 million barrels a day next month, as they’ve indicated they might, it would be the kingdom’s biggest increase over a two-month period since 2011, the IEA said.
Raising output further could shrink the country’s spare production capacity — the crude left idle for emergencies — to “an unprecedented level below 1 million barrels a day,†the IEA predicted. That would leave barely 1 percent of global supply to compensate for any additional outages.