Kamran Jebreili / AP
DUBAI, United Arab Emirates – OPEC and allies agreed on Sunday to possibly increase production limits on five countries, ending an earlier dispute sparked by the United Arab Emirates that has rocked world prices for energy.
The disagreement, sparked by a demand from the UAE to increase its own production, temporarily disrupted a previous cartel meeting. In a statement on Sunday, the cartel said Iraq, Kuwait, Russia, Saudi Arabia and the United Arab Emirates would see their limits increased.
“What binds us is far beyond what you imagine,” Saudi Energy Minister Prince Abdulaziz bin Salman said. “We differ here and there but we relate.”
Prince Abdulaziz declined to say how they came to this consensus, saying it would see the cartel “lose our advantage of being mysterious and intelligent”. But he clearly bristled at previous reports on the dispute between Saudi Arabia, long the heavyweight of the Vienna-based cartel, and the United Arab Emirates.
Prince Abdulaziz then referred to the start of a press conference in al-Mazrouei as a sign of respect.
“The UAE is attached to this group and will always work with it and within this group to do their best to achieve market balance and help everyone,” al-Mazrouei said. He hailed the deal as a “full deal” between all parties.
Outside of OPEC, however, tensions persist among neighboring nations. The UAE has largely withdrawn from the Saudi-led war in Yemen, while diplomatically recognizing Israel. Saudi Arabia has also reopened in Qatar after a multi-year boycott, although relations between Abu Dhabi and Doha remain frigid. Saudi Arabia has also aggressively sought an international trade headquarters, which could affect the UAE’s business hub, Dubai.
Abu Dhabi’s powerful Crown Prince Mohammed bin Zayed, the country’s de facto ruler, and Saudi Crown Prince Mohammed bin Salman have, however, been close over the years. The two leaders will likely meet in Saudi Arabia on Monday.
Under the new production limits, the UAE could produce up to 3.5 million barrels of crude oil per day as of May 2022. This is lower than the 3.8 million barrels per day they would have sought. Saudi Arabia’s limit of 11 million barrels per day would increase to 11.5 million, as would Russia’s. Iraq and Kuwait saw smaller increases.
In its statement, OPEC acknowledged that oil prices continued to improve.
“Economic recovery has continued in most parts of the world thanks to the acceleration of vaccination programs,” the cartel said.
Oil prices collapsed amid the coronavirus pandemic as demand for jet fuel and gasoline fell amid lockdowns across the world, briefly seeing oil futures trading in the negatives. Demand has since rebounded as vaccines, while still unevenly distributed across the world, reach guns in major global economies.
Benchmark Brent crude was trading around $ 73 a barrel on Friday.
Once tough enough to stop the United States with its 1970s oil embargo, OPEC needed non-members like Russia to force a production cut in 2016 after prices collapsed below $ 30. $ per barrel in a context of increasing American production. This agreement in 2016 gave birth to OPEC +, which joined the cartel by cutting production to help boost prices.
OPEC + agreed in 2020 to withdraw a record 10 million barrels of crude per day from the market to raise prices. It has slowly added some 4.2 million barrels over time.
Starting in August, the cartel said it would separately increase production by 400,000 barrels per day each month. This will allow it to phase out its current production of 5.8 million barrels of oil by the end of 2022, as provided for in the original agreement.
OPEC member countries include Algeria, Angola, Congo, Equatorial Guinea, Gabon, Iraq, Kuwait, Nigeria, Saudi Arabia, and the United Arab Emirates. OPEC + members include Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, Russia, Sudan and South Sudan.
Prince Abdulaziz, praising Sunday’s deal, offered a cheerful assessment of the future despite the recent turmoil.
“OPEC + is here to stay,” proclaimed the prince.