A constant feature of the oil market is the prospect of unforeseen supply outages, whether from war, industrial accidents, sabotage, natural disasters or more mundane operational problems. These outages range from a mere nuisance to a major disruptive event, depending on size, scope and duration of the interruption. OPEC has often stepped in with extra supplies when these events occur, offsetting the lost barrels. IEA member countries also have strategic petroleum reserves, which help cushion supply outages, although the U.S. is in the process of selling off its stockpile. In reality, Saudi Arabia is the main source of global spare capacity, one of the few sources of sizable capacity that can be ramped up or down on short notice. Low levels of spare capacity typically correspond with periods of time when oil prices are high, while the reverse is also true. Between 2003 and 2008, OPEC spare capacity was […]