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OPEC+ plans in disarray

as meeting is cancelled

POLICY MEMBERS of the OPEC+ group downed tools The UAE also has a point in terms of the base-
this week, cancelling their planned July 5 meet- line with Saudi Arabia being given a baseline of
ing at the last minute amid growing friction 11mn bpd despite having produced an average
between key participants Saudi Arabia and the of 10.38mn bpd during 2018, with October 2018
UAE. output running at 10.77mn bpd.
Riyadh has been pushing for anticipated Saudi oil production has only exceeded 11mn
monthly production increases of 400,000 bar- bpd twice in history – in November 2018 and April
rels per day (bpd) to be tied to a commitment 2020 when it hit 12.1mn bpd as it launched a price
to extend the existing supply cut eight months war with Moscow sending prices into freefall.
beyond the current April 2022 end date. Mean- However, state-owned Saudi Aramco maintains
while, the UAE is digging its heels in on an exten- that it has a ‘maximum sustainable capacity’ of
sion pending the upward revision of its reference 12mn bpd which it has been instructed to increase
point for cuts. by 1mn bpd by the Ministry of Energy. Russia also
Without a consensus among members on has a baseline of 11mn bpd.
the next steps, oil production from the group Meanwhile, the UAE has undertaken a major
will stay flat, with 5.8mn bpd of output withheld project to add to its reserves and increase capac-
from the market despite a significant increase in ity, late last year announcing the discovery of
demand anticipated during the second half of the 24bn barrels of oil resources and approving Abu
year. OPEC anticipates that oil demand will grow Dhabi National Oil Co.’s (ADNOC) $122bn
by around 5mn bpd between July and December, four-year spending plan. The company is on
while S&P Global Platts has forecast growth of course to increase oil production capacity from
8.8mn bpd between June and December. the current 4mn bpd to 5mn bpd by 2030.
The current agreement is based on percent- A date has not yet been set to make up for the
age reductions based on October 2018 produc- missed meeting, but member delegations are
tion levels, giving the UAE a baseline of 3.168mn understood to be continuing talks behind the
bpd, but the country’s production capacity has scenes to broker a deal.
now risen to 4mn bpd and it wants this taken With the rift between the Gulf neighbours
into account. appearing sizeable, Iraq has already noted the
While any such adjustment would be a devi- potential for disruption without further negoti-
ation from the course which has brought market ation with Mazhar Muhammed Salih, an adviser
stability and rising prices, Emirati officials have to Prime Minister Mustafa al-Kadhimi telling
noted that the country has had to shut in a dis- the Iraqi News Agency (INA): “In the absence
proportionate amount of production capacity of coordination and understandings between the
– 35% compared with the 22% average among members of OPEC, the beginnings of a price war
other members. will be formed again.”™

P4 www. NEWSBASE .com Week 27 09•July 9•2021