UAE and Saudi Arabia’s infighting threatens future of oil alliance
Lahore, 6th July: The international Oil producer, Organization of Petroleum Exporting Countries (OPEC) was thrust into crisis after a conflict between Saudi Arabia and the United Arab Emirates erupted.
The bitter infighting raised questions about the future of the energy alliance.
OPEC and non-OPEC partners, a group of some of the world’s most powerful oil producers suddenly abandoned plans to meet again on Monday after last week’s meetings failed unexpectedly to broker a deal on oil production policy.
However, the group did not set a new date to resume talks, which means no agreement was reached on a possible increase in the production of crude oil beyond the end of July.
This uncertainty left oil markets in a state of the void just as global fuel demand recovers from the ongoing coronavirus pandemic.
He added that back-channel talks are continuing but questions about UAE’s commitment to remain in OPEC will likely grow in the next coming days.
Croft said that the dispute between UAE and Saudi Arabia seemed to be about more than oil policy, with Abu Dhabi intent on stepping outside Saudi Arabia’s shadow and carving its own course worldwide.
On Friday, OPEC+ voted on a proposal to increase oil production by approximately 2 million barrels per day between August and the end of the year in 400,000 barrels per day monthly installments. It also suggested extending the remaining output cuts to the end of 2022.
However, these propositions were rejected by the UAE, which wants to aim for a higher baseline for its quota to permit greater domestic production.
The UAE Minister of Energy and Infrastructure Suhail Al Mazrouei informed CNBC’s Hadley Gamble on Sunday that they dismissed the proposal as it was not a suitable deal for them. Regarding the adjourned meeting, John Kilduff, a founding partner at Again Capital declared that the Opec solidarity has been dissolved.
This has led to a sudden increase in the oil prices as the international benchmark Brent crude futures traded at $77.34 a barrel on Tuesday, which was an increase of 0.2% for the session. Whereas, U.S. West Texas Intermediate futures increased by 1.6%, to $76.36.
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