The United Arab Emirates has not directed at anyone its decision to leave OPEC and the broader OPEC+ alliance, Sultan al Jaber, the chief executive of Abu Dhabi’s national oil company ADNOC, said on Monday.
“The United Arab Emirates’ sovereign decision to reposition itself within the global energy landscape, and to exit OPEC and OPEC+, is not a decision directed against anyone,” Al Jaber, who is also UAE Minister of Industry and Advanced Technology, said in a speech at the ‘Make It In The Emirates’ conference, as carried by Reuters.
In a surprise announcement last week, the UAE said it is quitting OPEC and the wider OPEC+ group effective May 1, to pursue its national interests.
For years, the UAE has been working to boost its crude oil production capacity to 5 million barrels per day (bpd) by 2027, and has frequently clashed with its fellow OPEC and OPEC+ producers over quotas. The UAE has insisted that it should be allowed to actually use more of its growing spare capacity. On this front, the country has been on a collision course with Saudi Arabia, OPEC’s top producer and de facto leader, in increasingly diverging views about how spare capacity should be used.
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Before its exit from OPEC, the UAE held the most spare production capacity in the Gulf region behind Saudi Arabia. These two producers basically hold nearly all global spare production capacity, but it’s meaningless at present as the closed Strait of Hormuz doesn’t allow any short-term increase in production or exports.
But once the current Hormuz crisis is over, the UAE is set to grow its oil production faster, analysts at Barclays said last week.
The remaining producers in OPEC+ will keep the group together, Amrita Sen, founder and director of market intelligence at Energy Aspects, told CNBC on Wednesday, adding that UAE’s exit doesn’t change “the ability of OPEC to influence oil prices.”
Sen argues that all OPEC Gulf producers will, like the UAE, look to pump as much as they can once the Strait of Hormuz crisis ends, whenever this happens, as they will want to restart the shut-in production and respond to the deepening global inventory drawdown.
By Charles Kennedy for Oilprice.com
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