EIA updates its definitions and estimates of OPEC crude oil production capacity

In-brief analysis

Each month we publish estimates of key global oil market indicators that affect crude oil prices and movements in our Short-Term Energy Outlook (STEO). Among the most important indicators for global crude oil markets are estimates of OPEC's effective crude oil production capacity and surplus production capacity, as well as any disruptions to liquid fuels production. Low surplus production capacity among OPEC countries can put upward pressure on crude oil prices in the event of unplanned supply disruptions or strong growth in global oil demand.

In our December STEO, we updated our estimates of OPEC crude oil production capacity based on the most recent information available as well as new definitions of maximum sustainable and effective crude oil production capacity. This update resulted in an increase in OPEC capacity of 0.22 million barrels per day (b/d) on average in 2024, 0.37 million b/d on average in 2025, and 0.31 million b/d on average in 2026, with similar increases to OPEC surplus capacity given limited changes to our estimates of actual OPEC crude oil production.

How EIA defines maximum sustainable and effective crude oil production capacity
Maximum sustainable capacity is the maximum rate of production that could theoretically be reached within a year, assuming existing production capacity is fully utilized and no disruptions occur.

We base our estimates of maximum sustainable capacity on public and governmental sources. OPEC countries report production capacity in their annual reports or other financial documents, and capacity estimates for many of these countries are available in trade press, news reports, and U.S. governmental sources such as embassy reporting. Because both the estimated values and the definitions of capacity from these various sources may be inconsistent, EIA makes its own independent estimates for maximum sustainable capacity.

Effective production capacity is calculated as the difference between maximum sustainable capacity and any disruptions. Effective production capacity is the rate of crude oil production that could be reached within 90 days and sustained, using sound practices that avoid damage to oil fields or their operations. We use this definition for the capacity estimates in the STEO because it most accurately describes the capacity available at any given time to meet market demand. Currently, we estimate that only a handful of counties within OPEC have surplus capacity.

Nameplate capacity, a metric used by industry participants to define production capacity for a country, is the total amount of production capacity that has been installed over time. However, we do not use this metric in the STEO forecast because production capacity can be damaged or degraded over time, overstating available capacity.

How EIA defines disruptions
We define a disruption as an unplanned oil production outage. Disruptions are due to events out of an oil producer's control, such as wars, sanctions, strikes, political uprisings, fires, weather-related events, or unscheduled equipment outages. Voluntary production cutbacks are not considered to be disruptions because they can be reversed at any time.

A sudden decline in production may indicate that a disruption has occurred. EIA validates whether a disruption has occurred by reviewing trade press, news reports, and company reports, and through conversations with industry. Scheduled maintenance, like that which occurs in the North Sea every summer, results in seasonal declines in production that are not considered to be disruptions.

How EIA defines surplus crude oil production capacity
Surplus production capacity-sometimes called spare capacity-describes the available production capacity held back as part of a coordinated agreement by OPEC or OPEC+ members. Because the withheld production is part of a voluntary agreement, it is not considered a disruption. EIA calculates surplus crude oil production capacity as the difference between the effective production capacity and actual production.

A disruption may also reduce surplus capacity without affecting actual production, as happened in the Saudi-Kuwait Neutral Zone. The effect on the market is that effective production capacity declines, putting upward pressure on crude oil prices.

Principal contributors: Erik Kreil, Sean Hill

Tags: OPEC, crude oil, oil/petroleum, liquid fuels, production/supply, capacity