Global oil markets may be facing heightened risk from tumult in the Middle East, but they’re better equipped to weather the shock than during previous crises.
Having slashed crude output this year to prop up prices, Saudi Arabia and its OPEC+ allies are left with a healthy reserve of spare production capacity. Outside of the Covid pandemic — when lockdowns caused demand to slump — it’s the biggest buffer in more than a decade.
OPEC, primarily Saudi Arabia and the United Arab Emirates, will be sitting on more than 4 million barrels a day of idle capacity this year and next, about 4% of global supplies, according to the US Energy Information administration.
That’s almost double the cushion they held during other regional crisis, such as when the kingdom’s Abqaiq processing facility was bombarded by Iran in 2019, or when Islamic State fighters captured huge swathes of Iraq in 2014. It’s almost 20% more than when Libyan output collapsed during the uprising against Moammar Al Qaddafi in 2011.
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