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LONDON: Saudi Arabia and the United Arab Emirates (UAE) could help to calm volatile oil markets if they pumped more crude, the International Energy Agency (IEA) said on Friday. The UAE and Saudi Arabia are the two oil producers with the most spare production capacity and could help to relieve dwindling global oil inventories that have been among factors pushing prices towards $100 a barrel, boosting inflation worldwide.

“These risks, which have broad economic implications, could be reduced if producers in the Middle East with spare capacity were to compensate for those running out,” the Paris-based agency said in its monthly oil report.

Brent crude oil futures turned positive following the release of the report and reached a session high of $92.08.

The IEA said if OPEC+ - the Organization of the Petroleum Exporting Countries members and allies like Russia - unwind their current output cuts completely, they could add 4.3 million barrels per day (bpd) back into the market.

OPEC sees upside to 2022 oil demand forecast on strong pandemic recovery

However, the IEA said that would slash effective spare capacity to 2.5 million bpd by the end of the year, held up almost entirely by Saudi Arabia and, to a lesser extent, the UAE.

For now, while OPEC+ is raising output each month, it is not hitting its monthly target of 400,000 extra barrels per day. The IEA said in January the gap between output and the target widened to 900,000 bpd.

“The bloc’s prolonged underperformance has effectively taken 300 million barrels, or 800,000 bpd, off the market since the start of 2021,” the IEA said.

A successful outcome to international talks with Iran could lift U.S. sanctions on the country’s exports and relieve supply tightness, the IEA added, gradually bringing 1.3 million bpd of Iranian oil back into the market.

Supply and demand look set to be balanced in the first quarter but are expected to flip into a surplus in the second quarter or second half of the year, the IEA added.

The need to refill depleted oil stocks, which in OECD countries fell by 60 million barrels in December down to seven-year lows, means immediate oversupply is unlikely.

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