UAE Says It’s Got ‘No Prior Position’ Before OPEC+ Oil Meeting

26 Nov 2021, 12:20 PM IST

(Bloomberg) -- The United Arab Emirates said it would not take a stance on OPEC+’s oil-output strategy before the group’s meeting next week.

“The UAE remains fully committed” to the OPEC+ alliance of major producers, state media tweeted in Arabic, citing the energy ministry. “There is no prior position regarding the next meeting.”

The country “reiterates that any decisions will be taken collectively,” according to a separate tweet in English.

The comments come as traders and analysts debate whether OPEC+ will react to the U.S. and other consumers releasing crude from their strategic reserves by pausing or halting its monthly production increases. The group, led by Saudi Arabia and Russia, meets on Dec. 2.

Kuwait, like the UAE a key member of OPEC+, also said overnight it was fully committed to the group’s “declaration of co-operation.” Signed in 2016, that formed an alliance between the Organization of Petroleum Exporting Countries and others such as Russia and Malaysia.

The 23 OPEC+ nations have agreed at their past few meetings to increase daily output by 400,000 barrels per month. Saudi Arabia and other members have consistently said they will be flexible and can go slower or faster, depending on global oil demand.

The U.S. government, concerned by soaring gasoline prices, on Tuesday said it would release 50 million barrels of oil from its Strategic Petroleum Reserve over the next few months. China, Japan, India, South Korea and the U.K. will sell or exchange roughly another 20 million barrels, in an unprecedented move by major importers to tame crude prices that have soared 60% this year to around $80 a barrel.

Biden’s Failure

The decision came after U.S. President Joe Biden failed to persuade OPEC+ to announce bigger supply hikes at its last meeting in early November.

OPEC+ will probably suspend its production increases in the first quarter of next year because of the releases and rising coronavirus cases in Europe, according to JPMorgan Chase & Co.

“The scale of the anticipated SPR release -- combined with the weakening physical market given the lockdowns in Europe -- further diminishes the need for OPEC+ to act,” JPMorgan analysts including Natasha Kaneva said on Wednesday. “We have already expected the global oil market to move into surplus through the first half of 2022 and anticipated OPEC+ to sit it out” between January and March.

Banks including Citigroup Inc. disagree, forecasting that the group will opt for continuation and raise daily production by 400,000 barrels in January.