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The UAE rejects the “unfair” OPEC + production agreement, and the oil dispute escalates

The UAE rejects the “unfair” OPEC + production agreement, and the oil dispute escalates


This United Arab Emirates Criticized on Sunday that the current oil production agreement between OPEC+ alliance members is unfair, and the escalation may undermine the OPEC alliance dispute vitality The market recovered after the epidemic.

This UAEAccording to reports, efforts to raise the production baseline derailed last week’s meeting of the League of Oil-Producing Countries and ran counter to its allies. Saudi Arabia.

“The UAE demands justice in the new agreement after April, and it is our sovereignty to demand mutual benefit with other countries,” Energy Minister Suhail Mohamed Al-Mazrouei said in a television interview.

“It is unreasonable to accept further injustices and sacrifices-we have always been patient,” he said in an interview with Arab Sky News. This is an unusually frank comment by an UAE official who usually handles disputes carefully.

Although OPEC+ leaders Saudi Arabia and Russia support the extension of the agreement to December 2022, the UAE hopes to agree to extend production until after the current agreement expires to increase production after April.

On Friday, a video conference meeting was held among the 13 members. OPEC Led by Saudi Arabia, followed by technical meetings and discussions among the 23 OPEC+ member states.

The broader group includes Russia, the world’s second largest oil producer.

Analysts from the United States stated that the obstacle to the discussion was “because the UAE had objected to the earlier Russia-Saudi Arabia agreement at the last minute”. Deutsche Bank.

“Since the establishment of individual baselines in 2018, the UAE has increased its production capacity and insisted on increasing its baseline by 600,000 barrels/day to 3.8 million barrels/day, allowing them to unilaterally increase production within the current quota,” said Saxo Bank Ole Hansen said.

Louise Dickson from Rystad said: “Negotiating… will be difficult because OPEC+ knows that if the UAE is allowed to produce from different bases, other members may protest.”

OPEC+ basically faces a choice: Either accept Abu Dhabi’s requirements or fail to reach an agreement that may push up crude oil prices. The unity of the alliance is also at risk. If the alliance is broken, it may trigger a price war and cause global economic damage.

OPEC said its meeting will be reconvened at the cartel’s Vienna headquarters on Monday.

Al Mazrouei stated that the UAE is ready to set up a committee of independent agencies to investigate its request.

Bloomberg reported on Thursday that an agreement has surfaced to increase production by 400,000 barrels per day from August to 2 million barrels per day by the end of 2021.

This will be in line with the broad strategy that OPEC+ has followed since May: Gradually increase production and drastically cut production in response to the collapse of demand at the beginning of the coronavirus pandemic.

Since the beginning of the economic crisis, the organization has held meetings almost every month to coordinate response measures.

Their strategy succeeded in guiding the price recovery-currently at its lowest level since October 2018.

The alliance must navigate a complex market characterized by rising demand but the potential for fragility, as well as the potential complications of returning to more Iranian exports in the medium term.

But the current high prices-this see Brent Crude oil prices climbed to over US$76 per barrel last week-this has triggered complaints from large crude oil consumers, such as India.

Abu Dhabi’s strong position also makes it compete with its long-term ally and neighboring Saudi Arabia, the world’s largest oil exporter.

According to reports, the UAE has proposed the idea of ​​exiting OPEC+ at the end of 2020 in order to extract more oil and take advantage of its huge investment in expanding production capacity.

Roger Diwan, an oil analyst at consulting firm IHS Markit Ltd, told Bloomberg News: “The UAE will work hard at this moment to use this meeting to confirm its excess capacity and bring it back online.”

“Compromises exist, but it’s just how they use their abilities, not if.”



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