World's Spare Oil Capacity Grows

The world's spare oil production capacity outside of Iran rose in last two months to 2 million barrels per day, up from 1.8 million bpd in the previous two months, Reuters quoted the EIA bimonthly report a day ahead of its publication. (Reuters, 25 October)

The spare oil capacity growth was attributed to waning demand for gasoline in the U.S. and the fall in oil use for power generation in the Middle East, EIA reports.

While demand fell, global production outside of Iran rose, the report says. Libya, Iraq and Saudi Arabia pumped more crude and the United States continued to draw more oil from its vast shale reserves.

EIA reports also points to a “very small” increase in global imports of Iranian crude since the July low. The report comes ahead of key decisions facing the Obama administration in December on whether to extend six-month “exceptions” or waivers to the sanctions to China, India, South Korea and other importers.

Iran Oil Production Falling - EIA

Iran oil production could fall by nearly 500,000 barrels per day by the end of 2012, the U.S. Energy Information Administration (EIA) said today. The reduced foreign investment in the country’s oil sector due to international sanctions is seen as the main cause of the falling production. EIA’s Short Term Energy Outlook had reported Iran’s oil production at 3.55 million bpd at the end of last year.

The forecast did not include the potential impact of recent EU and US sanctions that take full effect on 1 July.

"Iran's decline in output began to accelerate during the last quarter of 2011 and has continued. EIA believes that the acceleration reflects a lack of investment, which is needed to offset natural production declines," EIA said. "A number of foreign companies that were investing in Iran's upstream have halted their activities as a result of previous sanctions against Iran.”