Oil Prices Make Recovery as UAE Commits to Production Quota
By Adedapo Adesanya
Oil prices made a little recovery after plunging more than 12 per cent on Wednesday as a top oil producer, the United Arab Emirates (UAE) changed its mind from saying it would encourage others to boost their production above their agreed quotas to help balance the market.
On Thursday, Brent crude recorded a 0.19 per cent or 43 cent rise to trade at $109.46 per barrel while the United States West Texas Intermediate grew by 0.11 per cent or 15 cents to sell for $106.17 per barrel.
In a tweet quoted by media, the Emirati energy minister, Mr Suhail al Mazrouei, said that “The UAE believes in the value OPEC+ brings to the oil market,” and the country remains committed to the OPEC agreement for the gradual increase of oil production.
On Wednesday, the UAE’s ambassador to the US, Mr Yousef al-Otaiba said his country would encourage the Organization of the Petroleum Exporting Countries (OPEC) to consider higher output.
He said that “the UAE has been a reliable and responsible supplier of energy to global markets for more than 50 years and believes that stability in energy markets is critical to the global economy.”
Then on Thursday, Energy Minister, Mr al-Mazrouei backtracked on the ambassador’s statement and said the OPEC member is committed to existing agreements with the group to boost output by only 400,000 barrels per day each month.
The UAE is Saudi Arabia’s closest Gulf ally and one of the biggest OPEC oil producers and the US has approached both countries with requests to reconsider the gradual boost strategy to output growth, but both have been reluctant to do so.
The US has been calling on all global oil producers to boost production after it imposed a unilateral ban on Russian crude oil and oil product imports following the Ukraine invasion.
It even moved to ease sanctions on Venezuelan oil and is making efforts to seal a nuclear deal with Iran, which could lead to an increased oil supply.
President Joe Biden had announced a ban on Russian oil, liquefied natural gas, and coal imports on Tuesday. Russia is the world’s second-biggest petroleum exporter and usually exports 4.5 million barrels of crude and 2.5 million of oil products each day.
Prior to the American ban, many investors have been overlooking crude from Russia.