Iraqi Supply Loss Could Expose the Real Limits of OPEC Spare Capacity

In December last year, the EIA redefined the terms “maximum sustainable capacity” as the upper limit a producer could reach within a year if everything runs smoothly and “effective capacity” which is the amount of oil that could be realistically brought online within 90 days and sustained without damaging fields or infrastructure. You are talking about testing the outer boundary of it and would be almost entirely reliant on two producers ramping quickly, sustaining output, and pushing those barrels through the very same Strait of Hormuz that is currently under strain. But if Iraqi shut-ins approach 3 million bpd and linger, the discussion would quickly stop being about headline spare capacity and would instead be about deliverable barrels — in the right quality, moving through functioning shipping lanes.

Author: Julianne Geiger

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