Oil Rises As UAE Backtracks On OPEC Output Boost Statement

…Crude prices tanked yesterday after the UAE Ambassador to Washington said that the UAE favors further production increases.

…Today, the Emirati energy minister, Suhail al Mazrouei has reaffirmed that the UAE will stick to the OPEC plan of gradual production increases.

The UAE has taken a step back from assurances it would encourage fellow OPEC members to boost their production above their agreed quotas to help rein in runaway oil prices.

In a tweet quoted by media, the Emirati energy minister, 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.

The minister’s statement follows another one, made by the UAE’s ambassador to the United States, saying that “We favour production increases and will be encouraging Opec to consider higher production levels.”

Shared with the Financial Times, the statement also 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.”

Yet it seems Ambassador Yousef al-Otaiba’s statement was not coordinated with the energy ministry, which prompted the tweet by al Mazrouei.

Oil prices reacted positively to the Minister’s tweet, with Brent crude trading 5.97% higher at $117.8 per barrel, while WTI crude traded 5.23% higher on the day at $114.4 per barrel.

The UAE is Saudi Arabia’s closes Gulf ally and one of the biggest OPEC oil producers. The United States has approached both countries with requests to reconsider the gradual boost strategy to output growth, but both have been markedly reluctant to do so.

According to media reports, the White House had tried to organize phone calls with Riyadh and Abu Dhabi, but both had declined to speak with President Biden.

“There was some expectation of a phone call, but it didn’t happen,” a Washington official told the Wall Street Journal about Crown Prince Mohammed. “It was part of turning on the spigot [of Saudi oil.”

Washington has called 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 incursion.

NB: Irina Slav wrote this article for Oilprice.com