These figures do not convince all members of the Organization of the Petroleum Exporting Countries (OPEC+). Saudi Arabia, the head of the oil cartel, has decided to cut oil production by as much as three times, clashing with the ambitions of the United Arab Emirates, the smallest country in the Gulf, to produce as much oil as it can.
The latest heat up between the partners was at a meeting in Vienna last June. Saudi Arabia announced a further production cut of 1 million barrels per day and extended the existing OPEC+ total production reduction period for another year until 2024.
According to the agreement with the organization, The UAE can only pump 3 million barrels per day, far below current production capacity, and more importantly, ADNOC expects production to reach 5 million barrels per day by 2027, as ordered by the country’s president, Sheikh Mohamed bin Zayed.
The rate cut followed two attempts at so-called “market stability” but so far Riyadh’s decision has only sparked a new rift with the UAE and filled the coffers of Russia, which is using the funds to illegally invade Ukraine . According to Washington, the situation has revived Abu Dhabi’s claim to withdraw from the oil cartel.
Last March, a Wall Street Journal article sounded the alarm for the Gulf’s two largest economies. Saudi-UAE clash over oil prices and even war in Yemen led to Abu Dhabi’s decision to withdraw from OPEC+, US newspaper reports. The news sent oil prices plunging as much as 2%.
Oil prices fell immediately after the news was released, Unnamed UAE official denies UAE’s plan to quit OPEC entirelyin a statement to Bloomberg.
Prior to this, the UAE had not commented on the OPEC+ oil production cut decree issued by OPEC+ in October 2022. Regardless, the UAE’s stance has been to defend the measure as a “technical and non-political” production cut. However, a report published by The Wall Street Journal confirms that, U.S. officials have witnessed privately voiced disapproval from the Emiratis.
The version clash has sent oil prices down, benefiting the main beneficiary of the dispute: the United States. Washington is particularly critical of Saudi Arabia’s decision on OPEC+ output cutsThe group accused the group of maintaining high energy prices by siding with Russia in its confrontation with Ukraine.
More dialogue between the UAE and Saudi Arabia
“As we all know, the UAE’s production quota is well below its capacity and has increased. I appreciate the support of the UAE to increase the production quota by another 200,000 barrels per day.” UAE Energy Minister Sohail Mazrouei welcomed increased dialogue with Saudi Arabia.
At its last meeting, OPEC+ agreed to increase the UAE’s quota to more than 3 million barrels per day from 2024. Signs of reconciliation and rapprochement with OPEC+ have peaked as the oil cartel led by a UAE delegation celebrated its anniversary in Baghdad. “OPEC+ plays a key role in meeting the interests of producers and consumers and promoting sustainable investment in the energy sector,” Al Mazrouei said.