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
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