Under the condition of anonymity, officials from the United Arab Emirates denied a report that sent oil prices tumbling that they had plans to leave the OPEC alliance.
The UAE is reportedly considering leaving the producer group, which could allow it to increase output because of a growing rift with Saudi Arabia, according to a previous Wall Street Journal report.
The UAE has made it clear in both public and private that it will uphold its end of an agreement with other OPEC+ members for the remainder of this year. After initially dropping as much as 2.8% in response to the WSJ report, Brent crude futures later cut losses to trade above $85 per barrel.
Abu Dhabi has been considering which partnerships will serve its long-term interests the best for some time as it looks to capitalize on increases in production capacity. Two years ago, that project brought it into conflict with Saudi Arabia and other OPEC+ countries, sparking a feud that almost tore the coalition apart, but a compromise was reached.
Abu Dhabi may push for a higher OPEC+ production quota, according to a report by RBC Capital Markets LLC earlier this year, given that its current target of about 3 million barrels per day falls far short of the official capacity levels of more than 4 million.
The government-run Abu Dhabi National Oil Co. is spending billions of dollars to increase capacity even further, to 5 million barrels per day, which won’t be completed until 2027.
RBC reported that Sultan Al Jaber, the Adnoc CEO and a powerful person in the emirate, is “looking to monetize the substantial investments” in production capacity.
However, there are currently no indications that the UAE’s ambitions will put it in direct conflict with the other members of the Organization of Petroleum Exporting Countries.
The UAE would run the risk of political repercussions if it abruptly left OPEC, not just with Saudi Arabia, one of its main trading partners, but also with other Gulf allies like Kuwait and Iraq.
Suhail Al Mazrouei, the UAE’s energy minister, reaffirmed last month that the nation is still committed to OPEC+ production for the remainder of 2023 while speaking to Bloomberg television from Dubai.