Robin Mills: Opec’s spare oil capacity a cushion – for now | The National

Robin Mills: Opec’s spare oil capacity a cushion – for now | The National:



"The most recent Opec meeting, on June 11, was as casual as a post-World Cup brunch. Opec ministers breezed into Vienna, declared that markets were well supplied, affirmed their 30 million barrels per day (bpd) production ceiling, and were off again. Just two days earlier, Iraqi insurgent forces had swarmed into Mosul.



Would Opec have decided differently had it had more time to react to the dramatic events in Iraq? Probably not. The organisation’s 3.3 million bpd of official spare capacity is concentrated anyway in Saudi Arabia, with some in its allies the UAE and Kuwait – the task of meeting any supply crisis will fall to the Gulf triumvirate. They have already been filling the gap left by Libya, then Iran, for the past three years.



This leads to two competing narratives. One points to the need for record output from Saudi Arabia, to more robust demand than expected, from the US in particular, to disappointing supply from non-Opec countries outside North America, and to risks to Iraqi output. The International Energy Agency (IEA), mostly representing rich-country oil consumers, said that markets were “considerably tighter than they were a year ago”."



'via Blog this'