Shrinking Spare Oil Capacity Underscores Need for More Investment, IEA Says

Spare capacity is an important cushion for the oil market as it allows producers to quickly respond to unplanned outages that could tighten the market and cause big fluctuations in prices.

Ahmad Ghaddar, Reuters

The world’s spare oil production capacity which helps smooth the market will fall by the end of 2022 as OPEC+ producers lift output, highlighting the need for more investment to meet rising crude demand, the International Energy Agency (IEA) said on Oct. 14.

The IEA said in its monthly oil market report that OPEC+ spare capacity could fall to below 4 million bbl/d in the fourth quarter of 2022 from 9 million bbl/d in the first quarter of 2021. It forecast global demand at 99.6 million bbl/d in 2022, slightly above pre-pandemic levels.

Spare capacity is an important cushion for the oil market as it allows producers to quickly respond to unplanned outages that could tighten the market and cause big fluctuations in prices.

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