Reading too much into the Saudi capacity ceiling

MbS almost certainly did not mean what oil bulls have convinced themselves he did

A single comment by Saudi Arabia’s crown prince Mohammed bin Salman (MbS) in an otherwise extensive speech at the US-Arab Summit in Jeddah was enough to electrify the oil market and its observers. After an increase to 13mn bl/d of oil capacity by 2027, “the Kingdom will not have any additional capacity to increase production”, bin Salman said. Bloomberg, The Washington Post and others jumped on this as proof that Opec’s largest producer will quite soon hit its absolute ceiling. Analysts suggested that this would spell trouble for the global economy. Or that, because capex for investment will clearly not be the constraint, the limit must be rooted in geology. This is a substantial over-extrap

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