The U.S. State Department has lashed out against OPEC, accusing the cartel of hiding 1.42 million bpd in spare oil production capacity, S&P Global Platts reports, citing a statement sent to it by the State Department.
The State Department said figures from the Energy Information Administration suggested that OPEC was withholding 1.42 million bpd of spare capacity and the department was working with the cartel to “produce the spare capacity,” as S&P Global Platts put it.
The way this “hidden” number of barrels was calculated was not revealed. In its latest Short-Term Energy Outlook, the EIA estimated OPEC’s spare production capacity at 1.66 million bpd. Most of this must be Saudi Arabia’s spare capacity, and one cannot forget that the spare capacity of Venezuela is questionable, as is the spare capacity of other troubled oil producers such as Libya and Iran.
To make matters more confusing still, the International Energy Agency last month estimated OPEC’s spare capacity at 2.7 million bpd and is fast declining. Bloomberg quoted a warning from the international agency that the producers who had promised to offset any loss of supply from Iran would not be able to deliver on this promise.
The State Department spokesperson also told S&P Global Platts that Russia and Saudi Arabia were withholding production while the United States was ramping up, with the national total seen to rise by 1 million bpd within 12 months.
Interestingly, the accusations against OPEC come on the heels of a revelation that Russia and Saudi Arabia had agreed privately to increase production to offset any supply declines pushing prices higher. Reuters reported yesterday, citing an unnamed source, that “The Russians and the Saudis agreed to add barrels to the market quietly with a view not to look like they are acting on Trump’s order to pump more.”
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
- Why The Oil Price Rally May Soon End
- Energy Minister: Saudi Arabia Is Boosting Oil Production
- A New Era Of LNG Megaprojects
Think "Egypt's Lost Power"....think of the spare capacity skim via a metered gas pipeline for..... "malitias"..... Or offshore "Panama Pampers"....
Ukraine spare "capacity"....easements...
Dominion Energy via McDermott (CB&I) spare capacity and easement data "frontrun".....
Timed meet and greet....
The raison d etre of OPEC is to defend the interests of its members. This means enabling them to maximize the return on their finite assets. To achieve this goal, it is up to OPEC to follow policies that ensure the stability of the oil prices and a reasonable return to its members.
Pressure by President Trump on OPEC to raise oil production so as to force prices down in order to save his neck at the coming Congressional midterm elections in November is not in the interest of OPEC members.
OPEC and particularly Saudi Arabia and Russia are unable to raise their production significantly beyond the 650,000 barrels a day (b/d) which Saudi Arabia and Russia combined have already added two months ago no matter how loud President Trump shrieks. OPEC’s spare capacity hardly exceeds 1.5 million barrels a day (mbd). That should only be used to ensure stability of the global oil market and not serving Trump’s political interests.
Even assuming that Saudi Arabia has the spare capacity to raise its production further, it would not be expected to do so having publicly been insulted by the US President who claimed that King Salman wouldn’t last two weeks without US support. Contrast this with the tactful way in which President Putin treats his ally, Syria at least publicly.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London
Or what kind of moral basis or ethical responsibilities does that Ministry of Truth (the US State Dept) use in case the character of its "accusation" is of some kind of general ethical nature?
That's really funny! Could one imagine the US State Dept accusing the Pope of Rome of not reporting to the US Dept its decision of conducting or not conducting a mass in Paris??
Alice-in-the-wonderland kind of experience :))
If US republicans and similar political/corporate orientations keep pushing for fossil fuels instead of preparing for an orderly transition to alternatives, they can expect to see another worldwide economic disaster in the coming decades and there's a good chance that it'll be one of, if not the worst ever recorded.