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The White House can drive Iran's oil exports to zero, or it can have moderate U.S. gasoline prices, but it probably cannot have both.Under pressure from the United States, OPEC and its allies agreed on June 23 to boost production by an implied 1 million barrels per day from the start of July.The agreement failed to bring prices down and senior U.S. officials have since indicated they want an even larger increase to dampen the market.Most of the remaining spare capacity is in Saudi Arabia (2 million bpd) with smaller volumes in Iraq (330,000 bpd), the United Arab Emirates (330,000 bpd) and Kuwait (220,000 bpd).If Iran's exports are pushed close to zero from November, and Saudi Arabia and its allies step up production to fill the gap, remaining spare capacity will fall to 1 million bpd or less by the end of 2018 .If spare capacity is adjusted for increases in consumption, it will be at the lowest level since the oil shocks of 1973/74 and 1980/81 .If Iran's exports are eliminated entirely, and Saudi Arabia and its allies step up their own production to compensate, the OPEC spare capacity shock absorber will also disappear.
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