Tags: Oil | Capacity | spare | crude

IEA: World Faces 'Bumpy Ride' as Spare Oil Capacity Falls

Thursday, 15 Mar 2012 08:17 AM

Spare oil capacity in OPEC countries is dwindling to 2008 levels, and as prices rise amid geopolitical tensions, world oil markets are facing a "bumpy ride" in the coming month, the International Energy Agency reports.

The West has slapped sanctions on Iran, accusing the Middle East country of developing a nuclear weapons program, while Tehran has already cut supplies to parts of Europe as a countermeasure.

Iranian crude could fall by 800,000 barrels a day once sanctions take effect in July, while production in Colombia, South Sudan, Syria and elsewhere have taken hits due to labor strikes, sabotage, sanctions or other reasons.

Other OPEC countries like Saudi Arabia have rushed to make up for shortfalls, which has the International Energy Agency worried about OPEC's spare supplies.

"That is feeding in to an overall tightening of market fundamentals that has been under way since mid-2010," the Financial Time reports, adding that the IEA is concerned that non-OPEC supplies remain constrained and western oil inventories below their five-year average for a seventh consecutive month.

"With these buffers now so slim, the IEA predicted a 'bumpy ride in the months ahead,'" the Financial Times adds.

Saudi Arabia, meanwhile, insists it has spare capacity to make up for shortfalls that could result from escalating geopolitical tensions.

"There is ample production and refining capacity ... Saudi Arabia and others remain poised to make good any shortfalls — perceived or real — in crude oil supply," says Ali Al-Naimi, Saudi Arabia's oil minister, according to the Associated Press.

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2012-17-15
Thursday, 15 Mar 2012 08:17 AM
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