OPEC+ yet to reach an agreement on oil output deal – UAE

The UAE has made significant progress in resolving its standoff with OPEC+, nearing a compromise that could give the country a more generous output limit next year and allow the whole group to pump more oil in the coming months.

The talks, involving the UAE and Saudi Arabia, are still ongoing and any deal would need the support of other OPEC+ nations, according to delegates familiar with the discussions. While one delegate said the deal was effectively done, another said discussions were continuing.

The UAE’s energy ministry issued a statement acknowledging the talks, but said no agreement had yet been reached with the whole of OPEC+.

Last week, the Organization of Petroleum Exporting Countries and its allies were forced to abandon a tentative deal to boost oil production in monthly installments of 400,000 barrels a day because of last minute objections from the UAE. If the compromise is ratified at the group’s next meeting — for which there’s still no date — it could potentially open the way to higher output.

However, there is only a narrow window for a deal that could deliver timely extra oil supplies. August sales volumes are largely locked and most Gulf countries are preparing for an Islamic holiday that will close government offices and businesses for most or all of next week.

Without extra output from OPEC+, the International Energy Agency warned on Tuesday that the oil market will “tighten significantly” and potentially damage the economic recovery. Crude prices fell on the news, with Brent crude falling 2.3 per cent to settle at $74.76 a barrel.

The UAE’s dispute with OPEC+ centres around its demand for a higher production limit next year, in return for backing an extension of the cartel’s current agreement from April 2022 until December 2022.

Last week, Abu Dhabi asked to reset the baseline for its production cuts to about 3.8 million barrels a day next year, potentially increasing its production limit by more than 600,000 barrels a day. The UAE has agreed to set a new baseline of 3.65 million barrels a day, one delegate said. Another delegate said that figure was still under discussion.

Iraq is also pursuing a higher production baseline, according to a delegate, who didn’t specify the number it’s requesting or when it would take effect.

Like the UAE, Baghdad has bolstered production capacity since the OPEC+ accord began with the assistance of international companies.