Banking giant Goldman Sachs suspects that OPEC has been pumping far above its agreed quota since November 2010 and therefore cannot easily raise oil output much without cutting deep into global spare capacity.
Jeff Currie, the bank’s oil expert, said Saudi Arabia oil output had quietly crept up by 700,000 barrels a day even before the Libyan supply shock. So any assumption that OPEC has added 1.9m barrels per day over the last two years could be wishful thinking.
“We believe that OPEC spare capacity has already dropped below 2m barrels per day. The question therefore arises how much spare capacity is left to absorb potential supply disruptions in other countries.” said Currie.
If this picture is broadly correct, OPEC spare capacity is already close to the wafer-thin levels that led to wild oil price increases in the summer of 2008.
For more: Brent oil trading back at $113, Libya & Saudi Arabia in focus | Oil Prices, Oil Trading
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