NEWS AND RESOURCES
What’s New
Jul 20, 2022, 12:00 PM CDT
By Julianne Geiger \
WSJ sources: Saudi Arabia is producing close to capacity.
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Today is not the first time that concerns have been raised that Saudi Arabia’s true spare capacity is quite thin.
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In June, Saudi Arabia produced 10.424 million bpd, an increase of 60,000 bpd from the month prior.
Saudi Arabia has limited additional crude oil production capacity, Wall Street Journal sources revealed on Wednesday.
The sources, who are said to be familiar with Saudi Arabia’s oil production capabilities, were not named.
The mystery surrounding Saudi Arabia’s crude production capabilities has grown in recent weeks amid a tight oil market, Europe’s energy crisis, and the United States’ battle with high retail gasoline prices. Large oil producers such as Saudi Arabia—thought to be one of the only possible swing producers left within OPEC—try to maintain at least some spare capacity that can be turned on to respond to market demands, providing those producers with greater market control.
Alternatively, the market is spooked by a lack of spare capacity—particularly of OPEC’s largest producer—adding more volatility to already volatile oil prices. That fear exists even if that spare capacity is not needed now, simply because it means that should demand increase or supply elsewhere falter, they would be unable to respond to the changing market conditions.
U.S. President Joe Biden just returned from a trip to Saudi Arabia. Upon his return, the President said that he expected Saudi Arabia to boost oil production. Saudi Arabia, however, is bound by the production quota that it agreed to with OPEC+, at least until the end of August. Under that deal, Saudi Arabia’s production quota will be lifted to 11.004 million bpd for that month. After that, Saudi Arabia would be free to produce as much crude oil as it would like, limited only by its willingness to do so and its spare capacity.
Today is not the first time that concerns have been raised that Saudi Arabia’s true spare capacity is quite thin. For June, Saudi Arabia produced 10.424 million bpd, an increase of 60,000 bpd from the month prior. Its allocated quota for the month of June was 10.662—a miss of 238,000 bpd. Its under production lends credence to the notion that Saudi Arabia might not have as much spare capacity as some think.
By Julianne Geiger for Oilprice.com
Jul 20, 2022, 2:00 PM CDT
By Charles Kennedy -
As anticipated, U.S. President Joe Biden refrained from declaring a climate emergency, which would grant him additional powers to deal with a national climate crisis, during his speech Wednesday at the site of a former coal plant in Massachusetts.
Citing a staggering $145 billion in damages caused by extreme weather events just last year, and calling the climate crisis a “clear and present danger”, in a live stream, Biden told those gathered in Massachusetts that his administration would use its executive powers to tackle the impact of climate change.
“My message today is this: Since Congress is not acting as it should [...] this is an emergency, and I will look at it that way. [...] As president I will use my executive powers to combat climate crisis in the absence of Congressional action,” Biden said.
The U.S. president said that the administration would announce executive actions in the coming days, but this is unlikely to appease those who were holding out for a declaration of emergency.
Noting that our national security is at stake, with extreme weather damaging military installations in the U.S., and with 100 million Americans currently under heat alert, Biden discussed his $2.3-billion pledge to help communities across the country to build infrastructure designed to withstand natural disasters we are seeing today.
The administration's efforts are part of stated plans to move the U.S. power sector towards cleaner energy and less volatile price swings, as well as towards energy security that creates jobs, lowers costs and provides energy security.
Congress and the Supreme Court have set up roadblocks to the administration’s agenda. The Biden administration’s $550-billion budget for climate initiatives faces strong opposition, and not only from Republicans. That budget is part of the “Build Back Better” legislation.
Stiff opposition is coming in particular from Senator Joe Manchin, a conservative West Virginia Democrat who is reported to have received more money from the oil and gas industry in 2021 than any other member of Congress, according to NPR, citing the OpenSecrets tracking group.
By Charles Kennedy for Oilprice.com