The world was awash in crude oil just two years ago. Now there’s barely enough to meet the unquenchable thirst for energy. Faced with rapidly rising prices and sanctions on Iran, Saudi Arabia agreed to raise production to a record level. Russia is chipping in, too. But even Saudi Arabia, the world’s largest oil exporter, can only pump so much. Unleashing output now leaves the kindgom with less firepower to respond to future shortages. “There’s very little room for error,” said Matt Sallee, portfolio manager at the energy investment firm Tortoise. How much additional oil countries can quickly and sustainably produce is known in the industry as spare capacity. When spare capacity is high, such as during the oil price crash that began in late 2014, it acts as a shock absorber. Prices barely respond to threats to oil supply, like war in the Middle East, because countries can […]