Capacity to Lift Saudi, UAE Market Power

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The medium-term outlook for Opec-plus indicates that nearly all of its spare capacity could be held by Saudi Arabia and the United Arab Emirates by 2023. Saudi Arabia and the UAE are plowing funds into the upstream while most others in the 23-member Opec-plus alliance have sluggish investment programs, a new Energy Intelligence study of global oil developments shows. Already, output from West African producers Nigeria and Angola is dwindling; the same is true in non-Opec ally Malaysia. Meanwhile, capacity growth in large producers Russia and Iraq looks uncertain. Opec-plus is on course to becoming an even more lopsided alliance of “those who can” invest versus “those who can't.” This will have significant implications for influence, market share, and ultimately, the alliance itself. Saudi Arabia has targeted 13 million barrels per day of capacity by 2027, up 1 million b/d compared to current spare capacity (not including 250,000 b/d in the Neutral Zone), while the UAE plans to raise its capacity by 1 million b/d to 5 million b/d by 2030. Our analysis shows that, thanks to an expansion of the massive Upper Zakum, the UAE will acquire about 500,000 b/d in additional capacity by end-2025. The Saudis, meanwhile, are on track to see a massive capacity breakout in 2024-25, potentially reaching the 1 million b/d target in 2026. The offshore Zuluf expansion project will determine the Saudis’ success.

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