Oil market welcomes UAE consent to new OPEC+ deal
The global energy market can sigh with relief as the United Arab Emirates managed to save the OPEC+ deal. The cartel and its allies nearly messed up the deal on oil production cuts at the summit in July.
The UAE prevented the oil glut in the global market with its wise decision to make a concession to de facto OPEC leader Saudi Arabia. The stumbling block was the UAE’s insistence on an increase of its output quota but later the Persian Gulf country gave in to the common policy. In return, the UAE was granted permission to scale up its production rate to 3.65 million barrels per day starting from August from the current 3.17 million bpd. Notably, the original quota looked unfair and too low for the UAE compared to the other 23 nations of the alliance. Nevertheless, the UAE authorities’ decision created a good precedent that calmed down friction among other members and Saudi Arabia. Now, the participants are due to assemble for the summit in the near time and nail down the revised deal. In other words, the UAE put aside its hostile stance and became the rescuer of the OPEC+ pact.
Last year, OPEC and its allies had to curtail oil production when oil prices slumped on the back of the pandemic-induced lockdown that caused a slowdown in the global economy. This year, the major oil exporters were poised to release output restrictions month by month from August. They gathered for the summit to discuss individual quotes aiming to maintain a proper balance between demand and supply that should not disrupt a rally of oil prices. In fact, the UAE’s consent saved the market from unwanted price wars that could send oil prices into a downward spiral. The new OPEC+ deal sets the stage for the powerful oil producers to push oil prices up to $100 a barrel by joint efforts.