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OPEC nears production capacity
Publication year - 2007
Publication title -
oil and energy trends
Language(s) - English
Resource type - Journals
eISSN - 1744-7992
pISSN - 0950-1045
DOI - 10.1111/j.1744-7992.2007.320703.x
Subject(s) - unrest , spare part , production (economics) , sight , shut down , economics , capacity utilization , absorptive capacity , natural resource economics , business , operations management , microeconomics , industrial organization , political science , engineering , physics , astronomy , politics , nuclear engineering , law
At first sight, OPEC appears to have a great deal of spare production capacity: over 5 mn bpd in all. On further examination, it is clear that most of this consists either of heavy crude oil for which there is little or no market under present conditions, or of capacity that is shut‐in by violence and civil unrest. OPEC's effective spare production capacity is probably less than 1 mn bpd, which may account for its recent decision not to increase output during the second and third quarters of the year. It also makes it unlikely that OPEC will have much additional oil to offer already tight markets as demand undergoes its normal seasonal rise at the end of the year.