World’s spare oil capacity grows to 2 m bpd

The world’s spare oil production capacity outside of Iran rose in last two months as gasoline demand waned in the US and oil use for power generation fell in the Middle East, according to published reports.
In September and October, spare oil production capacity was 2 million barrels per day, up from 1.8 million bpd in the previous two months, the US Energy Information Administration (EIA) said in a bimonthly report.
The slightly larger cushion gives room for the Obama administration to continue pressuring Tehran over its disputed nuclear program through sanctions that target Iran’s oil revenues, Reuters added.
It said the EIA report, obtained by Reuters ahead of its publication, included a steep downward revision in spare capacity in July and August from 2.4 million bpd to 1.8 million bpd due to upward revisions of output from Saudi Arabia and the UAE.
Still, the cushion is relatively thin compared to previous years.
“The current level of surplus capacity is quite modest by historical standards,” the EIA said, adding that it averaged 3.6 million bpd from 2009 to 2011 and 2.7 million bpd in September and October last year. While demand fell, global production outside of Iran rose, the report said.
Libya, Iraq and Saudi Arabia pumped more crude and the US continued to draw more oil from its vast shale reserves.
The EIA said Saudi Arabia, which holds most of the world’s spare output capacity, pumped at 9.8 million bpd over the last 60 days, up about 100,000 bpd from the previous two months.
In a recent commentary that appeared in The Journal of the International Energy Agency, Petroleum and Mineral Resources Minister Ali Al-Naimi pointed out that the Kingdom has pledged to keep oil prices at levels that allow for well-supplied markets but also make energy affordable for all.
The Kingdom is not “not happy” with high oil prices, the minister added.
He said: “Saudi Arabia understands the vital role oil plays in economic growth and knows the value and progress which can be derived from energy resources but the price must be reasonable.”
The minister added: The wider world has also benefitted from these great resources, using them to fuel extraordinary improvements for the good of mankind. And as the global population continues to grow, it is this energy that will help further transform the lives of millions. Of course many energy challenges remain in the world, not least energy poverty and energy security. While some concern themselves with geopolitical tensions highlighted on the 24-hour news channels, for many millions of people in the world, energy security boils down to having enough gas to cook their family a meal or enough physical infrastructure to enable them to turn on a light.”
He also said: “It is clear that the real issue is tackling poverty, to enable people in developing countries to access reliable energy supplies so that they can take advantage of the many things we regard as commonplace. These are day-to-day issues for individuals, but major challenges for societies, and it is incumbent on all nations and policy makers to work together to continue to boost economic growth. Great progress has been made, but there is much work to do.”
The minister added: “For its part, Saudi Arabia has been, and remains, a stable supplier of oil to the world — and this security of supply brings reassurance to world markets.”
According to Reuters, the Paris-based International Energy Agency says the US and European sanctions have reduced Iran’s exports to around 860,000 bpd compared to 2.2 million bpd in 2011, .
While Iran had “precipitous declines” in crude exports, the situation has eased in September and October as most of its customers found ways to insure shipments after the European Union banned reinsurance, the EIA said.
“Preliminary data show a very small increase in global imports of Iranian crude oil since July,” the report said, noting the assessment was based on early tanker data and press reports, and could be revised.