BAKU, Azerbaijan, March 18
By Leman Zeynalova – Trend:
OPEC effective spare capacity will fall from nearly 6.5 mb/d in 2020 to as low as 2.4 mb/d in 2026, assuming Iran remains under sanctions, Trend reports with reference to the International Energy Agency (IEA).
This is despite the fact that OPEC countries will add 1 mb/d of new crude oil capacity and 250 kb/d of condensates and NGLs by 2026.
Iraq and the UAE are poised to build enough capacity for them to pump at fresh record highs, while Saudi Arabia and Kuwait benefit from a gradual increase of flows from the Neutral Zone. As for Venezuela, we have written off any prospect of an imminent recovery with the current Maduro Administration in place.
In this forecast, we have assumed that Iran remains under sanctions. If Iran were to be released from sanctions over the forecast period, around 1.7 mb/d of crude supply could be made available to the market in relatively short order. The new Biden Administration is trying to revive talks with Iran over the nuclear agreement that the former administration scrapped in 2018. However, many contentious issues still need to be resolved before sanctions could be eased.
Libya is expected to provide a substantial near-term boost to OPEC crude supply over the forecast period after the September 2020 lifting of a blockade that shut in production. However, the situation remains fragile under a new interim government and recent gains of more than 1 mb/d could be at risk of disruption.
The call on OPEC crude is expected to reach 30.8 mb/d by 2026, 5.3 mb/d more than the group produced at the start of 2021. As demand recovers and upstream investments lag in other parts of the world, Saudi Arabia, Iraq, the UAE, and Kuwait may have to ramp up production to ensure the world is adequately supplied. By the end of the forecast, the Gulf heavyweights may have to pump flat out to keep pace with demand if Iran remains under sanctions.
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