Last month’s unrest in Kazakhstan and supply outages in Libya have highlighted the problems the oil market will face if producers cut output or fail to boost capacity, OilPrice reports.
Most of the world’s spare capacity is currently held by OPEC’s Middle Eastern members Saudi Arabia and the United Arab Emirates (UAE). These two producers have the potential to increase production, but they are in no hurry to do so, putting the market at risk.
Any unexpected supply disruption the market is prone to can cause spikes in oil prices, sending them above $100 per barrel and close to historical records, analysts say.
Russia is unable to significantly increase production so far. In recent months, the country has been able to add 60,000 bpd, although it is entitled to a monthly production growth of 100,000 bpd.
Iran could have helped by giving the market more than 1 million bpd, but the country remains under US sanctions. This is proof that sanctions primarily harm the United States itself, making them buy expensive oil.