DUBAI – Saudi Arabia’s energy minister on Sunday pushed back opposition from fellow producer United Arab Emirates to a proposed OPEC + deal, calling for “compromise and rationality” to secure agreement when the group meets again on Monday.
It was a rare public spit among allies whose national interests have increasingly diverged and splashed into OPEC + policy options at a time when consumers want more raw to help a global recovery from the COVID-19 pandemic.
OPEC +, which groups the organization for oil exporting countries and its allies, voted on Friday to increase production by approx. 2 million barrels per Day from August to December 2021 and to extend the remaining cuts to the end of 2022, but UAE objections prevented agreement, sources had said.
“Enlargement is the basis and not a secondary issue,” Saudi Energy Minister Prince Abdulaziz bin Salman told Saudi Arabia’s Al Arabiya television channel.
“You need to balance the addressing of the current market situation with maintaining the ability to respond to future developments … if everyone wants to increase production, there must be an expansion,” he said, noting uncertainty about the course of the pandemic and output from Iran. and Venezuela.
The UAE said Sunday that it backs an increase in production from August, but suggested that the decision to extend the supply pact be postponed to another meeting. It said baseline production references – the level from which any cuts are calculated – should be reviewed for any expansion.
The withdrawal could delay plans to pump more oil out by the end of the year to cool oil prices.
“A great effort has been made over the last 14 months that has yielded fantastic results and it would be a shame not to maintain these achievements. “Some compromise and a certain rationality is what saves us,” said the Saudi energy minister.
“We are looking for a way to balance the interests of producer and consumer countries and, in general, market stability, especially when shortages are expected due to the fall in inventories,” he added.
In response to the destruction of oil demand caused by the COVID-19 pandemic, OPEC + last year agreed to reduce production by almost 10 million bpd from May 2020 with plans to phase out curbs by the end of April 2022. The cuts are now at approx. 5.8 million bpd.
OPEC + sources said the United Arab Emirates claimed that its original initial value was too low, but was ready to tolerate if the deal ended in April 2022. The United Arab Emirates has ambitious production plans and has invested billions of dollars to increase capacity.
Prince Abdulaziz, who emphasized Riyadh’s “sacrifice” for making voluntary cuts, said no country should use a single month as a reference, adding that there was a mechanism for filing objections and that “selectivity is difficult”.
The regional alliance that saw Saudi Arabia and the United Arab Emirates come together to project power in the Middle East and beyond – coordinating the use of financial influence and in Yemen’s military force – has been loosened as national interests emerged.
Abu Dhabi withdrew from the Yemen war in 2019 and saddled Riyadh. This year, Saudi Arabia took the lead in ending a series with Qatar despite reluctance from its Arab allies.
The kingdom has also moved to challenge the UAE’s dominance as the region’s business and tourism hub, as Riyadh fights for foreign capital to spread its economy away from oil.
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