The UAE supports an excessive increase in oil production, and the international oil price crashes

The UAE supports an excessive increase in oil production, and the international oil price crashes. Saudi Arabia and the UAE are currently two of the few countries with sufficient spare capacity. Production Capacity – A major oil producer with the ability to add millions of barrels of oil at any time. The United Arab Emirates supports an excessive increase in oil production, and international oil prices crash. The UAE supports excessive oil production, and international oil prices crash 1

Yousuf Al Otaiba, the UAE ambassador to Washington, the United States, said in a statement to the British and American media on Wednesday that the UAE supports increasing oil production and will encourage OPEC to consider faster Increase production. This news accelerated the decline in international oil prices and expanded the gains in U.S. stocks.

Neither the United Arab Emirates nor Iraq opposes excessive production increases. Brent oil plunged $11, and U.S. oil may have its worst single-day performance since the epidemic.

The UAE Ambassador’s statement mentioned that the UAE has been a reliable and responsible energy supplier to the global market for more than 50 years and believes that the stability of the energy market is crucial to the global economy.

Analysts say that the United Arab Emirates is the first OPEC member to support excessive production increases since the outbreak of the Russia-Ukraine conflict. It is reported that the UAE did not consult with other OPEC+ members on this decision. Saudi Arabia, a traditional ally of the UAE and which has always opposed excessive production increases, declined to comment for the time being.

The OPEC+ alliance is not monolithic. In particular, the important member United Arab Emirates made a "dramatic U-turn" in its oil production decisions, which caused the rapid decline in international oil prices to expand.

Previously, OPEC’s third largest oil producer, Iraq, also stated that if OPEC+ requests it, the country may follow up and increase production beyond the limit. The UAE originally refused to accept calls from Biden this week.

Scott Modell, managing director of Rapid Energy Group, said that the UAE “is saying what Washington wants to hear, but the final decision on March 31 still has to be heard by Riyadh and Moscow. If the UAE alone accelerates production increase, the unity of OPEC+ will be It will be shaky, and Abu Dhabi may not be willing to pay the price."

Bob Yawger, head of energy futures at Mizuho, ??said, "Don't take it seriously. They may add about 80% to the market soon, or even immediately. The supply of crude oil is 10,000 barrels per day, which is equivalent to replacing one-seventh of Russia’s supply. "The United Arab Emirates supports excessive oil production, and international oil prices crash 2

Local time on Wednesday (March 10), Yousef Al Otaiba, the UAE ambassador to the United States, said in a statement to the media, "The UAE supports increasing production and will also encourage OPEC colleagues to consider taking similar measures."

Since As a result, the United Arab Emirates became the first OPEC member to call for an increase in production after the situation between Russia and Ukraine escalated. Otaiba said that as the conflict between Russia and Ukraine has pushed international crude oil prices to the highest level in more than a decade, the UAE will encourage other member states to increase oil production levels.

Otaiba said: "For more than 50 years, the UAE has been a reliable and responsible energy supplier to the global market and believes that the stability of the energy market is crucial to the global economy."

Previously, it was reported that the White House tried to arrange a phone call between US President Biden and the actual leaders of Saudi Arabia and the United Arab Emirates, but failed. Currently, the United States is working hard to gain support from the international community, especially oil-producing countries, in an attempt to curb the surge in oil prices. As of press time, Brent crude oil, the international benchmark, is currently trading at around US$112 per barrel.

Last week Otaiba made a rare admission of tensions in the UAE-US partnership. The report pointed out that the United Arab Emirates felt uneasy in view of the reduction in the security commitment of the United States to its partners in the Middle East, so it has strengthened cooperation with Russia and other countries.

The UAE and other Gulf states, including Saudi Arabia, have relied on the U.S. military umbrella and are concerned that the Biden administration will weaken security commitments to the region. This concern has been particularly evident since the United States withdrew its troops from Afghanistan. As a result, the Saudi crown prince has rebuffed U.S. requests to speak to Biden in recent weeks.

Saudi Arabia and the United Arab Emirates are two of the few major oil-producing countries with sufficient spare capacity and the ability to increase millions of barrels of oil production at any time. At a time when U.S. gasoline prices are at record highs, if this huge amount of spare capacity can be brought to the market, it may help stabilize oil prices. The UAE supports an excessive increase in oil production, and international oil prices crash 3

The UAE said it will call on OPEC+ members to speed up the increase of oil production. This dramatic reversal may pit the UAE against other OPEC+ oil-producing countries.

The UAE Ambassador to the United States issued a statement on Wednesday, saying, "We are in favor of increasing production and will encourage OPEC to consider increasing production."

A person familiar with the matter revealed that the UAE did not consult with other OPEC+ members before commenting. Initial signs indicate that the country's proposal will encounter resistance within OPEC+. Iraq's oil minister has stated that the current oil production rate is sufficient.

The Saudi Ministry of Energy has not yet responded. But the UAE's announcement looks likely to spark tensions between the two Gulf states, which were already involved in a bitter feud last year.

Crude oil prices fell on the news. U.S. Secretary of State Blinken welcomed the UAE’s decision, saying that supporting increased production "is a key part of stabilizing global energy markets. It is crucial to ensure adequate energy supplies around the world." . ”

Reluctant OPEC+

So far, OPEC+ has resisted calls from the White House and other consumer countries to increase production. They believe that the recent surge in Brent oil prices to nearly $140 is mainly due to It is the geopolitical situation that is driving this, not a real shortage of supply.

Iraq’s Oil Minister Ihsan Abdul Jabbar Ismaael stuck to that stance on Wednesday, saying there was no need to change plans.

He said, “We believe that OPEC+’s existing production increase plan can already meet demand, and additional release of oil may damage the market.”

At the latest meeting, OPEC+ only passed 13 After only minutes of discussion, it decided to stick to its plan to increase production slowly, without saying a word about the conflict between Russia and Ukraine, which was the main reason for the rise in oil prices. The next OPEC+ meeting will be held on March 31.

Any proposal to increase production, especially one that is considered to help the West wean itself off dependence on Russian crude oil, may cause disagreements within OPEC+. In a phone call with Saudi Crown Prince Mohammed bin Salman last week, Russian President Vladimir Putin condemned all actions aimed at "politicizing global energy supplies."

Scott Modell, managing director of Rapid Energy Group, said that the UAE “is saying what Washington wants to hear, but the final decision on March 31 still has to be heard by Riyadh and Moscow. If the UAE alone accelerates production increases, OPEC+ unity will be shaky, and Abu Dhabi may not be willing to pay the price.

”