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The American newspaper “The Wall Street Journal” said that a new strategy owned by Abu Dhabi is at the origin of the confrontation between the United Arab Emirates and Saudi Arabia over oil production.
A rare public dispute has escalated between Saudi Arabia and its ally, the United Arab Emirates, over the export of oil, after statements by the two countries’ energy ministers regarding the deal. Organization of the Petroleum Exporting Countries (OPEC).
According to people familiar with the matter, the UAE has a new strategy of selling as much crude oil as possible before demand for black gold drops.
The United Arab Emirates has one of the largest untapped crude oil reserves in the world, and their new strategy represents an important turning point in the oil policy of one of the largest oil-producing countries in the Middle East.
And on Monday, the ministerial meeting of 23 member states of the Organization of the Petroleum Exporting Countries and Its Allies (OPEC Plus) was again postponed for lack of an agreement.
The “OPEC Plus” meeting was due to end last week and was devoted to determining the cartel’s production quotas from next August, but the United Arab Emirates rejected a plan to be negotiated, deeming it “unfair”.
The proposed plan calls for an increase in oil production of 400,000 barrels per day each August to December, so that the additional amount of oil brought to market by the end of the year will reach two million. barrels per day.
The Saudi-Emirati gap in “OPEC Plus” .. a conflict over the reasons
In a rare public dispute between Saudi Arabia and its traditional ally, the United Arab Emirates, members of the Organization of the Petroleum Exporting Countries “OPEC” and its allies (OPEC Plus), canceled their ministerial meeting on Monday to complete negotiations on the production plan and extend the deal until the end of next year, after postponing two previous meetings, for reasons considered by the U.S. newspapers political, not artistic.
This is in line with the general strategy followed by “OPEC Plus” since May, which is to gradually increase production after having sharply reduced it with the massive drop in demand when the Corona virus started to spread.
To some extent, this strategy has been successful, as oil prices have rebounded to around $ 75 per barrel for the two benchmarks, Brent North Sea and West Texas Intermediate, a 50% increase since the start of the year. year, a level similar to what the prices were in October 2018.
After the coalition failed to resolve the dispute, US crude hit its highest level in 6 years before falling back later.
Saudi Energy Minister Prince Abdulaziz bin Salman called on the UAE to “make concessions and rationality” to reach a deal when the coalition resumes its meeting on Monday.
On the other hand, UAE Energy and Infrastructure Minister Suhail Al Mazrouei said, “The UAE’s demand is only fair in the new deal after April, and that is our sovereign right to demand reciprocity with the rest of the countries “.
The person familiar with the UAE strategy told the US newspaper that “now is the time to maximize the value of energy sales domestically as prices are high,” adding: “The goal of increasing production is to generate more income to diversify the economy, whether it is investing in new energies, as well as increasing new income streams, which is most important “in light of the coronavirus pandemic.
The Gulf State is not worried about a sudden drop in demand and has been waiting for buyers for its crude for decades.
However, people familiar with the new path say the UAE wants to pump and sell as much as it can now, when demand and prices are high, as the extra income helps end the dependence on it. oil economy.
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