ABU DHABI: The United Arab Emirates yesterday reaffirmed its commitment to OPEC+ alliance agreements, a day after an envoy said it would urge the oil cartel to boost output. “The UAE is committed to the OPEC+ agreement and its existing monthly production adjustment mechanism,” Energy Minister Suhail Al-Mazrouei wrote on Twitter. “The UAE believes in the value OPEC+ brings to the oil market,” he added. At last week’s OPEC+ meeting, the 13 members of the Saudi-led OPEC group and their 10 allies, including Russia, agreed to hold firm on plans to stick to existing output targets through April. A surge in prices and supply fears following Russia’s invasion of Ukraine have led to calls for the Organization of the Petroleum Exporting Countries to increase output.
The OPEC+ group plans to boost production by just 400,000 barrels a day in April, the same pace as in recent months. The UAE ambassador to Washington, Yousef al-Otaiba, had said on Wednesday that his country favored “production increases and will be encouraging OPEC to consider higher production levels”. German Economy Minister Robert Habeck on Tuesday issued an “urgent appeal” to OPEC oil producers to ramp up output “to create relief on the market”.
Oil producing countries have an interest in acting in coordination-both within Saudi-led OPEC and the Russia-led extended alliance-to avoid a price war and keep control over the market. Saudi Arabia, the United Arab Emirates, Kuwait and Iraq have an estimated combined reserve capacity of 2.5 million to three million barrels per day. Brent oil rebounded yesterday, after tanking the previous day on hopes that the huge amounts of sanctions-hit Russian oil could be largely replaced by sourcing from elsewhere. European benchmark Brent North Sea crude climbed 5.1 percent to $116.80 per barrel in morning deals.
New York’s WTI contract advanced 3.5 percent to $112.58. Both contracts had collapsed by more than 12 percent in value on Wednesday, as traders also seized on a glimmer of hope for peace talks between key producer Russia and Ukraine. Brent tumbled as low as $105.60, having hit a peak of $139 just two days before, as the Ukraine crisis continues to send shockwaves through markets. The United Arab Emirates said Wednesday it would urge fellow states in the OPEC oil producers’ cartel to boost output, while US talks with massive producer Venezuela appeared to be making progress.
“Crude prices rebounded this morning after being whipsawed on various Russia headlines,” said Markets.com analyst Neil Wilson. “Brent and WTI plunged yesterday in a brutal reversal as the UAE indicated it could start pumping more oil and call on friends at OPEC to do more. “Comments from Russian and Ukrainian officials also pointed towards a path to peace, but the situation on the ground is no different.”
At the same time, Iraq has said it could lift output and nuclear talks with Iran were also showing signs of bearing fruit. However, with the Ukraine war still raging and crude oil supplies still tight, expectations are for the commodity to maintain its price strength. “Traders are still very much in a cautionary mode as it is not clear to them that the current change in momentum or shift in the direction of the oil trend will last,” said AvaTrade analyst Naeem Aslam. – AFP