Saudi Arabia resists UAE opposition to the OPEC + agreement

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DUBAI (Reuters) – Saudi Arabia’s energy minister rejected on Sunday opposition from fellow Gulf producer the United Arab Emirates to a proposed OPEC+ deal and called for “compromise and rationality” to secure an agreement when the group meets on Monday.

Public discord has been rare among allies whose national interests are increasingly diverging, spilling over into OPEC+ policy setting at a time when consumers want more crude to aid the global recovery from the COVID-19 pandemic.

OPEC +, which includes the Organization of the Petroleum Exporting Countries and its allies, voted on Friday to increase production by about two million barrels per day from August to December 2021 and extend the remaining cuts until the end of 2022, but objections from the UAE prevented the agreement. The sources said. Read more

Saudi Energy Minister Prince Abdulaziz bin Salman told the Saudi-owned Al Arabiya channel that the extension was the main and not a secondary issue.

“You have to balance addressing the current market situation and maintaining the ability to respond to future developments… If everyone wants to increase production, there has to be an extension,” he said, referring to the uncertainty over the course of the epidemic and production. from Iran and Venezuela.

The UAE said on Sunday that it supports the increase in production from August but suggested that the decision to extend the supply agreement be postponed to another meeting. He said basic production references – the level at which any cutbacks are calculated – must be reviewed for any extension. Read more

The confrontation may delay plans to pump more oil until the end of the year to calm oil prices.

“Great efforts have been made over the past 14 months that have produced great results, and it would be a shame not to maintain those achievements… Some compromise and some rationality is what will save us,” the Saudi energy minister said.

“We are looking for a way to achieve a balance between the interests of producing and consuming countries and the stability of the market in general, especially when shortages are expected due to low 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 about 10 million barrels per day from May 2020, with plans to phase out the restrictions by the end of April 2022. The cuts now amount to about 5.8 million barrels. barrels per day.

OPEC+ sources said the UAE claimed its baseline was originally too low, but is willing to forgive if the deal expires in April 2022. The UAE has ambitious production plans and has invested billions of dollars to boost production capacity.

Prince Abdulaziz, who stressed Riyadh’s “sacrifices” in making voluntary cuts, said that no country should use one month as a primary reference, adding that there is a mechanism for filing objections and that “selectivity is difficult.”

The regional alliance that saw Saudi Arabia and the United Arab Emirates unite to project their power in the Middle East and beyond — coordinating the use of financial influence and military power in Yemen — has faded as national interests emerge.

Abu Dhabi exited the Yemen war in 2019, and Riyadh weighed in. Saudi Arabia took the initiative this year to end a row with Qatar despite the reluctance of its Arab allies.

The kingdom has also moved to challenge the UAE’s dominance as a business and tourism hub in the region as Riyadh competes for foreign capital to diversify its economy away from oil.

(Covering: Marwa Rashad in London, Ghaida Ghantous in Dubai, Alaa Swailem in Cairo. Writing by Ghaida Ghantous. Editing by Hugh Lawson, Peter Cooney and Daniel Wallis

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