OPEC members reached a compromise with the United Arab Emirates, agreeing to lift the amount of oil that country can eventually pump as part of a wider agreement with Russia-led producers to boost global supplies, according to people familiar with the matter.
At issue was how much oil Abu Dhabi would be allowed to produce under a proposed deal that sought to add an extra 2 million barrels per day of crude to the market to cool oil prices. Crude prices have recently soared to their highest levels in two and a half years as economies around the globe – especially more developed ones- cast-off COVID-19 restrictions, boosting demand for energy.
The UAE’s energy ministry issued a statement acknowledging the talks, but said no agreement had yet been reached with the whole of OPEC+.The negotiations are nonetheless the first sign that Riyadh and Abu Dhabi are moving to cool off tensions after an unusually public fight earlier this month that briefly sent crude to a six-year high in New York.
Last week, the Organization of Petroleum Exporting Countries and its allies were forced to abandon a tentative deal to boost oil production in monthly installments of 400,000 barrels a day because of last minute objections from the UAE. If the compromise is ratified at the group’s next meeting — for which there’s still no date — it could potentially open the way to higher output.
However, there is only a narrow window for a deal that could deliver timely extra oil supplies. August sales volumes are largely locked and most Gulf countries are preparing for an Islamic holiday that will close government offices and businesses for most or all of next week,
Last week, Abu Dhabi asked to reset the baseline for its production cuts to about 3.8 million barrels a day next year, potentially increasing its production limit by more than 600,000 barrels a day. The UAE has agreed to set a new baseline of 3.65 million barrels a day, one delegate said. Another delegate said that figure was still under discussion. Iraq is also pursuing a higher production baseline, according to a delegate, who didn’t specify the number its requesting or when it would take effect.
Like the UAE, Baghdad has bolstered production capacity since the OPEC+ accord began with the assistance of international companies.