We now turn to OPEC to review its current production levels and discuss its ability to increase production. Although OPEC production exceeded 32 million b/d in 20156 (including Indonesia which rejoined OPEC), its near-term growth (excluding Iran) may be limited. Saudi Arabia and Iraq accounted for 1.2 million b/d7 of the growth in 2015. As for Saudi Arabia, there is some question whether current production levels can continue despite the estimated spare capacity of roughly 2 million b/d.8 For Iraq, the current low price environment is impacting its coffers and CAPEX budget. There have been anecdotal reports that the Iraqi government has asked upstream companies to cut budgets and hold production steady and the Kurdistan Regional Government is struggling to pay upstream contractors.9 If these reports are true, then Iraqi production may be flat or even decline in 2016. Finally, as of February 2016, a number of reports have surfaced about OPEC setting a production freeze based on January 2016 production levels. Recent discussions have also included Russia, and this has helped move oil prices higher.10 However, it’s hard to see how Iran would agree to a production freeze now in light of the recent lifting of sanctions on the country.