Saudi Arabia’s Energy Minister on Sunday rejected opposition from his Gulf counterparts, the United Arab Emirates, to a draft OPEC + deal and called for “compromise and rationality” to reach an agreement when the group meets on Monday.
It was a rare public feud between allies whose national interests have increasingly diverged, spilling into OPEC + politics at a time when consumers want more crude to help a global recovery from the COVID-19 pandemic.
OPEC +, which brings together the Organization of the Petroleum Exporting Countries and its allies, voted Friday to increase production by around 2 million barrels per day from August to December 2021 and to extend the remaining cuts until the late 2022, but objections from the UAE prevented a deal, sources said. Read more
“Extension is the base and not a side issue,” Saudi Energy Minister Prince Abdulaziz bin Salman told Saudi TV station Al Arabiya.
“You have to find a balance between managing the current market situation and maintaining the ability to react to future developments… if everyone wants to increase production, there has to be an extension,” he said. , noting the uncertainty over the course of the pandemic and production.
The UAE said on Sunday it supported an increase in production from August, but suggested postponing the decision to extend the supply pact to another meeting. He said baseline production benchmarks – the level from which cuts are calculated – should be reviewed for any expansion. Read more
The stalemate could delay plans to pump more oil until the end of the year to cool oil prices.
“Great efforts have been made over the past 14 months which have yielded fantastic results and it would be a shame not to maintain these achievements. … A certain compromise and a certain rationality are what will save us, ”said the Saudi Minister of Energy.
“We are looking for a way to balance the interests of producing and consuming countries and the stability of the market in general, especially when shortages are expected due to depleted stocks,” he added.
In response to the destruction of oil demand caused by the COVID-19 pandemic, OPEC + agreed last year to cut production by nearly 10 million barrels per day from May 2020, with the intends to phase out the restrictions by the end of April 2022. The cuts now amount to around 5.8 million. bpd.
OPEC + sources said the UAE maintains that its baseline was initially too low, but that it is willing to tolerate if the deal ends in April 2022. The UAE has plans to ambitious production and have invested billions of dollars to increase their capacity.
Prince Abdulaziz, who highlighted Riyadh’s “sacrifice” by making voluntary cuts, said no country should use a single month as a baseline, adding that there is a mechanism to file objections and that “Selectivity is difficult”.
The regional alliance that saw Saudi Arabia and the United Arab Emirates join forces to project their might in the Middle East and beyond – coordinating the use of financial weight and, in Yemen, military force – loosened as national interests gained the upper hand.
Abu Dhabi extricated itself from the Yemen war in 2019, straddling Riyadh. Saudi Arabia has taken the lead this year to end a dispute with Qatar despite the reluctance of its Arab allies.
The kingdom has also decided to challenge the dominance of the UAE as the region’s business and tourism hub as Riyadh struggles to attract foreign capital to diversify its economy away from oil.
Source: Reuters
