Why UAE may withdraw from OPEC+ over tensions with Saudi Arabia, Russia – Reports

With tensions running high between the United Arab Emirates and its petroleum allies, Saudi Arabia and Russia, Abu Dhabi considers the idea of leaving OPEC+, media reported.

The Bloomberg news agency reported this on Thursday, citing its sources.

This step was not in line with the UAE’s policy, as the country has stayed away from public conflicts for a long time, preferring to address issues quietly behind closed doors, the news outlet reported.

The media added that it was unclear yet whether the warning was “a maneuver to force a negotiation over production levels, or represents a genuine policy debate.’’

The relations between Riyadh and Abu Dhabi escalated since the late summer, when the UAE increased its oil output beyond the OPEC+ quota envisaged in the deal, prompting warnings from Saudi Arabia.

The situation has deteriorated by now in light of the UAE’s rising backlash on the distribution of production targets, which the country’s government considers unfair.

Meanwhile, Bloomberg reported that the UAE officials have not announced in public its intent to withdraw from the organization.

According to the agency, reports on the UAE’s exit from OPEC+ have appeared in very challenging circumstances, as any internal disputes may undermine the already fragile oil market against the backdrop of the long-standing coronavirus pandemic that threatens oil demand.

Along with these developments, the UAE Energy Ministry said on Wednesday that it had reached a 126-per cent compliance with the OPEC+ oil output cuts deal in October by reducing its production level by 153,000 barrels per day.

Earlier in the week, the OPEC+ Joint Ministerial Monitoring Committee discussed the situation in the oil market amid the second wave of the pandemic and the feasibility of increasing the alliance’s production from 2021 under prevailing conditions.

It made no recommendation, although a day earlier, OPEC+ experts recommended that ministers consider maintaining the current production restrictions for the first quarter or for the first half of 2021.

The final decision is expected to be made at the annual OPEC+ ministerial meeting, scheduled for Dec. 1.