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Lack of Spare Capacity In World Oil Markets Signals Higher Prices

June 28, 2018

Via: Forbes

It hasn’t even been a week, but it’s already apparent that OPEC’s recent move to increase production won’t be enough to curb oil prices from climbing higher. Global benchmark Brent is already driving toward $80 a barrel again, and $90 oil is not out of the question in the coming weeks, with perhaps a push toward $100 before the end of the year.

Put simply, the more OPEC increases production, the less spare capacity the group has, leaving the oil market on a knife’s edge as it deals with a host of potential supply disruptions stemming from geopolitical and other issues. When oil markets set their sights on dwindling spare capacity, the result can be painful for consumers. Such concerns were behind oil’s record run to $147 a barrel in 2008.

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