Goldman Sachs stated that Saudi Arabias abundance of spare oil capacity could be wiped out if the kingdom ramps up its production to 10mn bpd.
The kingdom said it would unilaterally produce as much oil as the market needed after the Organization of the Petroleum Exporting Countries failed to reach agreement as a whole on output policy.
According to al-Hayat, Saudi Arabia would boost output to 10mn bpd in July, which Jeff Currie of Goldman Sachs said would leave only 500,000 bpd spare.
"If you get up to (10 mln bpd) you start to really create a very tight market relative to spare capacity," was reportedly quoted by Reuters as saying at the Reuters Global Energy and Climate Summit.
"But the question that's more appropriate is when do you get to 9.5, when do you get to 10? Because when you start to look out over the horizon, their ability to create more flexibility in spare capacity increases tremendously."
Extra output from Saudi Arabia would reflect increased refinery demand, said Currie.
"When you look at OPEC production, it's highly correlated to refinery runs in the key consuming regions. The ramp up in refining runs over the next six months will be very significant," Currie added.
