"Facing rampant output losses first from Libya and then from Iran, OPEC has been pressured to open the taps over the last couple of years and boosted production to new record highs, in turn cutting into spare capacity", they wrote, adding that Saudi Arabia has the most spare capacity, and outisde that country, only 0.7 million b/d remain. "On our estimates, OPEC-11 spare capacity will likely stay minimal given a dearth of new projects in the next 5 years", they continued, pointing out that the capacity gains they expect to see in Saudi Arabia will likely only mitigate the declines of existing fields. In regard to Iraq, its output is becoming increasingly critical for global oil supplies, increasing at a phenomenal pace, recently rising to a record high of 3.2 million b/d from an average of 2.4 million b/d in 2010. "From a technical perspective, Iraq’s oil projects are among the most straightforward and least expensive in the world, in terms of capital costs and operating expense", said Merrill Lynch analysts, still cautious as politics, security and infrastructure present major challenges to oil development. "We now forecast Iraqi oil production to average 4.9 million b/d in 2017, compared to a government target of 9-10 million b/d", they concluded.
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