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Saudis Warn of Dwindling Spare Capacity

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There will be no additional supply hitting oil markets immediately as a result of US President Joe Biden’s Jul. 15 visit to Saudi Arabia. But relations between the two states appear to be on the mend, with potentially important implications for global energy markets. How this plays out in future Opec-plus output policy remains to be seen, but all eyes are fixed on the group’s next meeting on Aug. 3, when it will consider how to manage oil markets after its current production deal ends in September. Riyadh has already made a couple of things clear: It is reluctant to fully tap its spare capacity to try to lower oil prices, and it wants other global producers to pitch in and hike upstream investments. In a regional summit in Jeddah and closed-door talks with the US, Saudi officials held back from making any explicit commitment to supply additional barrels to the current oil market, sources told Energy Intelligence. US officials also said they did not expect an immediate move to increase production but that they were hopeful of action in the medium term — including possibly from September. Energy Intelligence understands that Saudi Arabia is open to the idea of a gradual increase in production, within the context of the Opec-plus alliance. Officially, Washington and Riyadh signed an agreement in which Saudi Arabia "committed to support global oil market balancing for sustained growth." It also said they had discussed "further steps" to "help stabilize markets considerably."

Topics:
Oil Supply, Opec/Opec-Plus, Opec-Plus Supply , Crude Oil, Capital Spending
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