The OPEC+ production deal may be destined to end, as it is becoming clear that the participating countries are reaching their natural limits for crude oil production.
Many OPEC countries have been struggling to fulfil their assigned quotas recently, but Saudi Arabia and the UAE were thought to have substantial spare capacity. Nevertheless, on the sidelines of the recent G7 summit, President Macron of France was heard conveying to US President Biden the results of a phone call he’d had with the UAE’s president, Sheikh Mohammed bin Zayed al-Nahyan:
“He told me two things. I’m at a maximum, maximum [production capacity]. This is what he claims. And then he said [the] Saudis can increase by 150 [thousand barrels per day], maybe a little bit more, but they don’t have huge capacities before six months’ time.”
Saudi Arabia has a theoretical capacity of 12–12.5 million barrels per day (bpd), of which it is currently producing just 10.5 million bpd, and it appears that it may take some months to restore the remaining 1.5–2 million bpd of additional capacity. The UAE has also been working on increasing its capacity to 4 million bpd from the current 3.4 million bpd.
The focus will likely now return to encouraging non-OPEC producers to increase production. ExxonMobil, the US oil major behind the Mobil lubricant brand, announced earlier in the year that it expects to grow its output in the US Permian Basin by 25% this year, but some other producers have been hesitant about increasing production.