Saudi Arabia and UAE will not tap emergency oil capacity

  • Sources: Saudi Arabia and the United Arab Emirates are poised to deliver a “significant increase” in crude oil production if the market faces a severe supply crisis this winter.
  • Combined, OPEC members have between 2 million bpd and 2.7 million bpd of spare production capacity.
  • Report on spare capacity OPEC is seen by analysts as ‘critical’.


Saudi Arabia and the UAE have the capacity to produce more crude, but they won’t tap that capacity — at least not yet, according to three unnamed Reuters sources.

The message is critical for OPEC producers to get across to the market, which cannot be seen as losing control of the market – control that comes only by having the spare capacity to influence the market if that is necessary.

According to the sources, Saudi Arabia and the United Arab Emirates are poised to realize a “significant increase” in crude oil production if the market faces a severe supply crisis this winter. The sources said this spare capacity would only be tapped in the event of a supply crisis.

“With possibly no gas in Europe this winter, with a possible price cap for Russian oil sales in the new year, we can’t throw every barrel on the market at the moment,” said one of the Reuters sources: “The only time we can proving that we have more spare capacity is when it comes to a protracted crisis.”

The sources said OPEC members together have between 2 million bpd and 2.7 million bpd of spare production capacity.

Nevertheless, OPEC+–and OPEC- have not met the current production targets set in the OPEC+ agreement agreed two years ago. The most recent data suggests that the group’s compliance rate with its production cuts is 320%, which is more than 2.5 million barrels per day below the target.

Despite the group’s underproduction, global oil prices have fallen over the past week. However, Saudi Arabia increased its official sales price for most of its crudes to most markets, including Asia.

By Julianne Geiger for Oilprice.com

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