GRAPHIC-Global spare oil capacity in U.S. hands after Saudi outage

Published 14/09/2019, 22:00
© Reuters.  GRAPHIC-Global spare oil capacity in U.S. hands after Saudi outage

* OPEC oil production: https://tmsnrt.rs/2LArZY3

* U.S. oil production: https://tmsnrt.rs/2VVVEiv

* OPEC spare capacity (EIA): https://tmsnrt.rs/2VVkYFd

LONDON, Sept 14 (Reuters) - An attack on Saudi oil

facilities on Saturday is believed to have disrupted half the

country's production capacity, making the United States the only

real holder of the global supply cushion via its ability to

raise own output or to soften sanctions against other major oil

producers.

Saudi Arabia has yet to comment on the extent of damage on

its oil production but industry sources have said some 5-6

million barrels per day (bpd) or 5-6% of global supply have been

affected. Saudi Arabia, the Organization of the Petroleum Exporting

Countries' de-facto leader and largest producer, has been long

seen as the custodian of the world's spare oil capacity.

Spare capacity is the extra oil a producing country can

bring onstream and sustain at short notice, providing global

markets with a cushion in the event of natural disaster,

conflict or any other cause of an unplanned supply outage.

Industry sources have said Saudi Arabia will be able to

restore supply within days. A prolonged supply outage will have

a major bullish impact on oil prices, which in turn will spur

further gains in U.S. shale production.

The United States has briefly overtaken Saudi Arabia as the

world largest crude exporter this year, only a few years after

removing a ban on oil exports because of large needs at home as

the world's largest oil consumer.

Analysts have repeatedly underestimated U.S. output growth

gains with the country now producing around 15% of global

supply.

Besides the United States, the only countries which have

significant spare capacity are Iran and Venezuela.

Both are subject to U.S. sanctions and have seen their

exports reduced to a trickle over the past year as U.S.

President Donald Trump has tightened sanctions.

Iran has seen its exports falling by over 2 million bpd

since the sanctions have been imposed and Venezuela have seen

its exports plummeting too.

While analysts expect Venezuelan production to more or less

stabilise at current levels of around 700,000-800,000 bpd for

the rest of the year, Iranian oil production is forecast to fall

further.

Energy Aspects has said it expects OPEC spare capacity to

fall to below 1 million bpd in the fourth quarter from two

million bpd in the second quarter of 2019.

WILDCARDS

OPEC member Libya is in the middle of a civil war, which

threatens its ability to continue pumping oil. Another big

Libyan disruption would add to the shocks and highlight the

spare capacity problem.

Nigerian exports have also suffered big from disruptions.

Meanwhile, U.S. crude oil production is expected to rise to

new records.

However, large U.S. crude output gains and slowing global

demand because of a weaker global economy have contributed to a

rise in oil stocks worldwide.

The International Energy Agency, which coordinates energy

policies of industrialised nations, said on Saturday the markets

were still well supplies despite the Saudi disruptions.

"We are massively oversupplied," said Christyan Malek, head

of oil and gas research for Europe, Middle East and Africa at

J.P. Morgan, adding it would take five months of a 5 million-bpd

outage to take global crude supply levels back to a 40-year

normal average.

"Having said that, this attack introduces a new,

irreversible risk premium into the market," he added.

OPEC Oil Production https://tmsnrt.rs/2LArZY3

OPEC Oil Production png https://tmsnrt.rs/2VXGPMh

U.S. Oil Production https://tmsnrt.rs/2VVVEiv

U.S. Oil Production png https://tmsnrt.rs/2Wzk9yX

Spare Capacity -GS https://tmsnrt.rs/2Wz3H1H

OPEC oil production capacity interactive https://tmsnrt.rs/2VVkYFd

OPEC oil production capacity png https://tmsnrt.rs/2VVl0wP

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(Reportin by Dmitry Zhdannikov and Ron Bousso; Writing by

Dmitry Zhdannikov;

Editing by Marguerita Choy)

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