BAKU, Azerbaijan, July 7. Many of the OPEC+ group’s members are now producing at or near their near-term peak production levels, Trend reports with reference to Fitch Solutions.
“While supply is rising elsewhere to help offset the loss, OPEC+ continues to fall short of its monthly production targets. Although performance is highly mixed across the group, most members are producing below their current output quotas, with Nigeria and Angola sharply underperforming. This is raising concerns over the ability of the group to unwind its cuts in full. In our view, many of the group’s members are now producing at or near their near-term peak production levels. However, we see substantial scope for growth among several of the OPEC heavyweights, notably Saudi Arabia and the UAE and, to a lesser extent, Iraq and Kuwait,” reads the latest report from Fitch Solutions.
Recently, doubts have been raised over the actual levels of spare capacity held by the group, after French President Emmanuel Macron was reported as saying that the UAE had said that it was pumping at around full capacity, while Saudi Arabia could only add around a further 150,000b/d. The UAE later clarified that it had been referencing the constraints on the OPEC+ deal (which will remain in place until December of this year) rather than underlying capacity constraints, but the doubts persist.
“In our view, such doubts are overblown. The pipeline of projects brought online in the UAE over the past five years suggest that the emirates can comfortably reach its stated 4mn b/d capacity and, in fact, its output has previously approached this level, during the brief price war in 2020.
Similarly, Saudi Arabia neared (or, according to some sources briefly exceeded) its own 12mn b/d capacity over the same period. For Saudi Arabia, the issue is more one of policy. The kingdom typically keeps a large share of its capacity in reserve, partly because it forms the crux of its influence over the global oil market and partly because producing at peak levels, while technically feasible, may not be optimal over long-term periods of time, particularly for more mature assets,” reads the report.
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