Business
Oil Markets Face Iran Conflict With Little in Reserve
Escalating tensions with Iran are hitting a global oil market stripped of its usual shock absorbers, risking severe price spikes if supplies are disrupted.
OPEC and its Russia-led allies are set to meet Sunday, and analysts anticipate an agreement to increase supply. However, any actual output boosts will be constrained by the group’s limited spare production capacity, according to a note to clients by RBC Capital Markets.
Typically, major producers boost production using their spare capacity to stabilize markets during crises. But almost every member of the OPEC+ grouping of countries is already producing at near maximum levels, analysts say. According to a report by Barclays, both spare capacity and above-ground inventories, measured in days of demand they cover, are tighter now than before the 2022 invasion of Ukraine, leaving Saudi Arabia as the sole producer with a meaningful buffer.