Abu Dhabi Says It's Ready to Pump More Oil Under OPEC Deal
(Bloomberg) -- Abu Dhabi said it’s ready to increase oil output in line with guidance set by OPEC and allied producers, echoing comments by Saudi Arabia that it will boost supply to meet demand.
Government-run producer Abu Dhabi National Oil Co. “has the ability to increase oil production by several hundred thousand barrels of oil per day, should this be required to help alleviate any potential supply shortage in the market," it said Tuesday in an emailed statement. Adnoc, as the company is known, can pump as much as 3.3 million barrels of crude a day and will increase output capacity to 3.5 million barrels daily by the end of the year.
Abu Dhabi, the capital of the United Arab Emirates, holds most of the Middle Eastern crude producer’s oil deposits. The U.A.E. pumped 2.89 million barrels of crude a day in June, 20,000 barrels a day more than in May, according to a Bloomberg survey. Crude and condensate exports rose to a nine-month high in June on demand from Japan and China.
Saudi Arabia and the U.A.E. are pledging to add barrels amid calls by U.S. President Donald Trump for more oil from the Organization of Petroleum Exporting Countries. Trump, in an interview on Fox News on Sunday, said OPEC is manipulating the market and called on the group to add 2 million barrels of crude supply.
Oil prices have gained more than 3 percent since OPEC and allies agreed on June 22 to raise output to meet production caps set in 2016. Some OPEC members, including Venezuela and Libya, haven’t been pumping up to their limits, contributing to gains in prices over the past week. Brent crude rose 1.1 percent to $78.16 a barrel at 1:20 p.m. in London.
Adnoc hasn’t announced any customer allocations for August. To comply with OPEC’s 2016 agreement to cut output, Adnoc had been supplying customers less oil than they had contracted to buy. Under long-term crude contracts, buyers and sellers generally have leeway to supply or receive about 5 percent to 10 percent more or less oil each month than agreed.
The company generally informs its customers of oil allocations at the end of each month. If it makes no announcement, this typically indicates that buyers will receive their full allotment of contracted oil for the coming month.
Saudi Arabia and Russia, which led OPEC and partner countries in reaching last month’s production deal, reaffirmed the agreement in statements on Tuesday, saying this will mean increasing oil output by 1 million barrels a day. Countries participating in the original 2016 accord to reduce supply had removed too much oil from the market and should now add some back, they said in June.
OPEC and its allies will “strive to adhere” to production targets set in 2016 and aim to stabilize the oil market, U.A.E. Energy Minister Suhail Al Mazrouei said in a separate statement. Mazrouei, who serves this year as OPEC’s president, said the U.A.E. is ready to help ease any supply shortages in cooperation with OPEC.
©2018 Bloomberg L.P.