Oil, OPEC without Emirates increases production by 188 thousand barrels per day

Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria and Omanthey decided to increase its oil production with further 188,000 barrels per day starting in June. This is what these countries, all OPEC members, communicated at the end of the meeting. The summit is the first after the United Arab Emirates’ withdrawal from the cartel. This is a similar increase to that announced in March and April, equal to 206,000 barrels per day excluding the Emirates share.

Theoretical increase

The seven countries, which will meet again on June 7, “will continue to carefully monitor and evaluate market conditions, as part of their ongoing efforts to support market stability”, their joint note reads. The announced increase is only theoretical, as producers in the Persian Gulf continue to be unable to export some of their crude due to the blockade of the Strait of Hormuz due to the war between Iran and the United States. The summit on June 7 will coincide with a meeting of the so-called “Joint Ministerial Monitoring Committee” (JMMS) of OPEC+.

Third consecutive

This is the third consecutive increase in production this year, announced just two days after the United Arab Emirates (UAE) left OPEC and the alliance. Increases of 206,000 barrels per day were agreed at the previous two meetings this year, so the current increase appears to be the same, with the sole exception of the UAE joining. Due to the war in Iran and transit problems through it Strait of Hormuz, from which 20% of exported crude transitsthe overall production of OPEC countries fell by 27.5% in March. Only a few OPEC members – primarily Saudi Arabia – have spare capacity to increase production.

Emirati-Arabia

The Emirates, which for years have been at odds with Saudi Arabia over production quotas, hope to be able to raise their production from the usual 3.4 million to around 5 million barrels a day once the situation in the Gulf stabilizes. Unlike other Gulf countries, the economy of the United Arab Emirates is increasingly dependent on oil revenues. Just today, Adnoc ( Abu Dhabi National Oil Company) announced a commitment to invest $55 billion in new projects over the next two years, confirming “the acceleration of growth and implementation of its strategy with the assignment” of new programs for the period 2026-2028.

“The project procurements cover Adnoc’s upstream and downstream operations and usher in a new phase of project delivery that will enhance the UAE’s manufacturing capacity, strengthen industrial resilience and broaden the impact of the company’s plans” to increase spending and production in the UAE, Adnoc said. Crude oil prices rose last week to a four-year high due to the lack of an agreement between Iran and the United States to end the war.

Many analysts fear that there will be a series of disruptions in supplies of oil and refined products, such as kerosene, in the coming weeks, which could cause inflation to rise again in many industrialized countries. In particular, Jorge Leon, an analyst at Rystad Energy, told AFP that the cartel intended to send “a two-way message”: the exit of the United Arab Emirates would not compromise the functioning of OPEC+ and that the group continues to exercise control over global oil markets despite the massive disruption to oil trade caused by the war. “Although on paper production is increasing, the real impact on physical supply remains very limited due to the constraints of the Strait of Hormuz”, added Leon according to whom “it is not so much a question of adding barrels, but rather of signaling that OPEC+ continues to dictate the rules”.