The United Arab Emirates and Saudi Arabia have reached the outline of an agreement that will block an agreement by OPEC and its allies to raise oil production, four delegates and advisers to the group said Wednesday, but discussions warnings continue and the agreement is yet to be finalized.
Saudi Arabia has agreed in principle to review the “base” level of the UAE, said people familiar with the discussions, following the Gulf stateblocked an Opec + agreement last week because it did not address the issues on its own production goal.
They said an agreement appeared to be close, but final details on the exact level of the baseline – which is the basis for calculating a member country’s production target – were still under discussion.
Any agreement between Saudi Arabia and the UAE it will also have to be signed by other members of the Opec + alliance, which includes Russia, at a meeting that has not yet been organized.
Opec aimed to increase production by 400,000 barrels per day each month by the end of the year; a timetable that will likely be restored if the UAE-Saudi agreement comes to fruition and other members revisit the UAE’s basic goal above.
The UAE has resurrected its production capacity in recent years, from around 3.5mb / d in 2018 to 4m b / d today, meaning it believes it is entitled to a higher baseline and therefore an output target. By 2030 they must closer at 5m b / d.
This month’s OPEC meetings come to a standstill due to the dispute between the UAE and Saudi Arabia, fueling volatility in crude oil markets amid concerns that the sput will prevent the rise. of the planned offer and undermine the cartel’s cooperation.
The group, which decreased production by almost 10m b / d at the height of sapping demand blocks last year, has slowly increased production as demand has recovered, but at a rate that many traders and oil analysts believe it is too slow to stop the market from squeezing fast.
Marti, u International Energy Agency he warned that unless Opec moved rapidly to raise supply, rising oil prices could begin to drive the economic recovery from the pandemic.
Oil prices hit the higher level since 2018 last week, climbing above $ 77 a barrel. Wednesday’s gross Brent was slightly at $ 76.66 a barrel.
Formal confirmation of the agreement between the two countries can wait for another OPEC meeting, he suggested to people familiar with the talks, who warned that relations between the two Gulf allies remained strained.
“They cannot be officially confirmed,” said a adviser from the Gulf countries who are aware of the negotiations, referring to Saudi Arabia. “I think they don’t want to give the UAE such a boost.”
Reuters reported Wednesday that the deal had been made, with the UAE set a new base target of 3.65mb / d.
Two of the four delegates and advisers told the Financial Times that they expected the agreed final baseline could be lower, perhaps around 3.5mb / d. The Gulf adviser said the new baseline would apply from April 2022.
Saudi Arabia wants to extend the Opec + agreement at least by the end of 2022, believing that the oil market needs more certainty given the Covid-19 crisis and the emergence of variants like Delta.