Saudi Arabia strikes back against UAE against OPEC+ agreement Reuters

Authors: Marwa Rashad and Ghaida Ghantous

DUBAI (Reuters)-Saudi Arabia’s energy minister opposed the Gulf oil producer United Arab Emirates’ opposition to the proposed OPEC+ agreement on Sunday and called for “compromise and rationality” to reach an agreement when the organization reconvenes on Monday.

This is a rare open quarrel among allies whose national interests are increasingly divided, and it affects OPEC+ policy making when consumers want more crude oil to help the world recover from the COVID-19 pandemic.

OPEC+, composed of the Organization of Petroleum Exporting Countries and its allies, voted on Friday to increase production by about 2 million barrels per day from August to December 2021 and extend the remaining period of production cuts to the end of 2022, but the opposition of the UAE prevented Reached an agreement, sources have said.

“The extension is the basis, not the secondary issue,” Prince Abdulaziz bin Salman, Saudi Energy Minister, told the Saudi Arabian Arab TV channel.

“You have to strike a balance between responding to the current market situation and maintaining the ability to respond to future developments… If everyone wants to increase production, then production must be extended,” he said, noting the course of the pandemic and the impact of production. The uncertainty comes from Iran and Venezuela.

The UAE said on Sunday that it supports increasing production from August, but recommended that the decision to extend the supply agreement be postponed to another meeting. It said that the benchmark production reference-calculating the level of any reduction-should review any extensions.

The deadlock may postpone plans to increase oil supply until the end of the year to cool oil prices.

The Saudi Energy Minister said: “The last 14 months have made tremendous efforts and achieved amazing results. It would be a shame not to maintain these achievements…. Some compromises and some rationality can save us.”

“We are looking for a way to balance the interests of producing and consuming countries and overall market stability, especially when shortages are expected due to reduced inventories,” he added.

In response to the destruction of oil demand caused by the COVID-19 pandemic, OPEC+ agreed last year to reduce production by nearly 10 million barrels per day starting in May 2020, and plans to phase out the reduction by the end of April 2022. The current production cut is about 5.8 million barrels bpd.

OPEC+ sources said that the UAE believes that its benchmark was initially set too low, but if the transaction ends in April 2022, the UAE is prepared to tolerate it. The UAE has formulated ambitious production plans and has invested billions of dollars to increase production capacity.

Prince Abdulaziz emphasized Riyadh’s “sacrifice” in voluntary cuts. He said that no country should use one month as a benchmark, adding that there is a mechanism for raising objections and that “selectivity is difficult”. .

The regional alliance between Saudi Arabia and the UAE to project power in the Middle East and beyond — the coordinated use of financial influence and military power in Yemen — loosened as national interests emerged.

Abu Dhabi was liberated from the Yemen war in 2019 and was burdened by Riyadh. Saudi Arabia took the lead this year to end its dispute with Qatar, despite the reluctance of its Arab allies.

As Riyadh competes for foreign capital to diversify its economy and stay away from oil, Saudi Arabia has also begun to challenge the UAE’s dominant position as the region’s commercial and tourist center.