OPEC+ fails to decide deal on July 2, to continue on Monday

MOSCOW, Jul 5 (PRIME) -- The OPEC+ alliance has again failed to coordinate the fate of the oil output reduction deal on July 2, and discussions will continue on Monday.

The Joint Ministerial Monitoring Committee previously recommended that the alliance continue increasing production in August–December by 400,000 barrels per day each month and prolong the deal until the end of 2022 from the end of April 2022.

But the United Arab Emirates (UAE) saw no need in prolongation until the end of 2022 nine months before the deadline, and wants the alliance to revise the country’s baseline production level, from which the output reduction starts, in case the deal is prolonged.

“The UAE and its international partners have invested significantly in boosting their production capacity and believes that, if/when the agreement is extended, the baseline reference figures should reflect its actual production capacity, rather than the outdated October 2018 production reference,” the country’s energy ministry said in a statement on July 4.

Bloomberg reported that the UAE wants to raise its production quota by almost 700,000 barrels per day to 3.8 million barrels.

The UAE now wants the OPEC+ to decide on a further increase of production within the OPEC+ alliance, and to discuss prolongation of the agreement later.

“The UAE remains fully committed to OPEC and OPEC+ and we support an increase in production from August. However, this should not be conditional on extension to the current agreement,” Energy Minister Suhail al-Mazrouei said in a Twitter statement. He also said in an interview to the Energy Intelligence Agency that he hoped for coordination of an agreement on Monday, but that the UAE will insist on an increase of the quota if the deal is prolonged until the end of 2022.

Saudi Arabian Energy Minister Abdulaziz bin Salman Al Saud said in an interview to Al Arabiya news channel that an increase of oil production for OPEC+ by 400,000 barrels per day in August–December was not enough for the countries to cease all output contractions in April 2022. Prolongation of the deal is the basis of the deal, while the increase of production is only part of the offer, he said.

He also was surprised with the UAE’s disagreement over the quota, which was set in March 2020. “I am unaware about any country opposing its quota at a meeting in March 2020,” he said, adding that the UAE was the only country that objected to the latest proposal of Saudi Arabia.

In a response to the UAE’s claims, he also said that no country could use an oil production level for a single month as its reference point.

A source in one of the delegations told PRIME on July 2 that the alliance discussed individual conditions for the UAE.

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