That’s not what’s called spare capacity

Emmanuel Macron reportedly said this to Joe Biden a couple of days ago:

I had a call with MbZ [UAE leader 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 (thousands barrels per day). Maybe a little bit more, but they don’t have huge capacities before six months’ time.

Now read the comments by the UAE’s energy minister, Sheikh Suhail bin Mohammed Al Mazrouei (emphasis mine):

In light of recent media reports, I would like to clarify that the UAE is producing near to our maximum production capacity based on its current OPEC+ production baseline.

Also, make sure to read this Twitter thread by Amena Bakr, Chief OPEC Correspondent for Energy Intelligence.

In two words, a country’s unused OPEC+ quota is one thing and its spare production capacity is quite another. “We’re pumping close to our OPEC+ cap” was the message, not “to our physical spare capacity.”

The UAE produced 3.8 mmbpd of crude oil in April 2020 but only 3.0 mmbpd in May 2022. Moreover, OPEC put the UAE’s crude output in April 2020 even higher, at 4.0 mmbpd, “based on direct communication.” There’s no way the implied 0.8 mmbpd of unused capacity has completely evaporated.

Last summer, the UAE even complained that its OPEC+ quota – based on production capacity – was too low. That’s because the country had (apparently) expanded its capacity between October 2018 (the reference month for the OPEC+ deal) and April 2020 (the last high-output month before the drastic OPEC+ cut).

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