https://bisoninterests.com/content/f/the-myth-of-opec-spare-capacity The Myth of OPEC+ Spare Capacity
September 18, 2021|White Paper
(Important Disclaimer at Bottom)
As energy prices across the globe rise, many observers and pundits continue to downplay the possibility of a global energy supply crisis, often citing OPEC+ spare capacity as the panacea. The perception that OPEC+ is flush with spare capacity is pervasive. But due to a lack of reliable data and no formal reporting or verification requirements, many industry experts and analytics firms have adopted OPEC+’s self-reported numbers. No one knows exactly how much spare production capacity OPEC+ really has, and few seem interested, despite the potential implications.
In the last few months, Bison’s CIO Josh Young has shared some of our work indicating that OPEC+ has materially less spare capacity than advertised on financial TV and podcasts, in conference presentations, and elsewhere. Below, we explore this possibility in-depth, with a particular focus on OPEC+’s two most important producers, Russia and Saudi Arabia.