By Marwa Rashad and Ghaida Ghantous
DUBAI (Reuters) – Saudi Arabia’s energy minister on Sunday rejected opposition from fellow Gulf producer the United Arab Emirates to a proposed OPEC + deal, calling for “compromise and rationality” to secure a deal when the group will meet again on Monday.
It was a rare public dispute between allies whose national interests have increasingly diverged, spilling over into the OPEC + policy setting at a time when consumers want more crude to aid a global recovery from the COVID-19 pandemic.
OPEC +, which groups the Organization of the Petroleum Exporting Countries and its allies, voted on Friday to increase production by about 2 million barrels a day from August to December 2021 and extend the remaining cuts until the end of 2022, but objections from the United Arab Emirates prevented the deal. the sources had said.
“Extension is the foundation and not a side issue,” Saudi Energy Minister Prince Abdulaziz bin Salman told the Saudi-owned Al Arabiya television channel.
“You have to balance addressing the current market situation with maintaining the ability to react to future developments … if everyone wants to increase production, then there has to be an extension,” he said, pointing to the uncertainty about the course. of the pandemic and production. from Iran and Venezuela.
The United Arab Emirates said on Sunday that it supported a production increase from August, but suggested deferring until another meeting the decision on the extension of the supply pact. He said baseline production benchmarks, the level from which cuts are calculated, need to be revised for any extent.
The standoff could delay plans to pump more oil until the end of the year to cool oil prices.
“Great efforts were made in the last 14 months that provided fantastic results and it would be a shame not to maintain those achievements. … Some compromise and some rationality is what will save us,” said the Saudi energy minister.
“We are looking for a way to balance the interests of producing and consuming countries and the stability of the market in general, especially when shortages are expected due to decreasing stocks,” he added.
In response to the destruction of oil demand caused by the COVID-19 pandemic, OPEC + agreed last year to reduce production by nearly 10 million bpd starting in May 2020, with plans to phase out restrictions to end of April 2022. The cuts are now approximately 5.8 million barrels per day. million bpd.
OPEC + sources said the UAE argued that its baseline was originally set too low, but were willing to tolerate if the deal ended in April 2022. The UAE has ambitious production plans and has invested billions of dollars to increase capacity.
Prince Abdulaziz, who emphasized Riyadh’s “sacrifice” by making voluntary cuts, said that no country should use a single month as a benchmark, adding that there is a mechanism for raising objections and that “selectivity is difficult.”
The regional alliance that saw Saudi Arabia and the United Arab Emirates joining forces to project power in the Middle East and beyond, coordinating the use of financial influence and, in Yemen, military force, has been relaxed as interests nationals came to the fore.
Abu Dhabi broke free from Yemen in 2019, saddling Riyadh. This year, Saudi Arabia took the lead in ending a dispute with Qatar despite the reluctance of its Arab allies.
The kingdom has also moved to challenge the UAE’s dominance as the region’s business and tourism hub as Riyadh competes for foreign capital to diversify its economy away from oil.
Fusion Media or anyone involved with Fusion Media will not accept any responsibility for loss or damage as a result of reliance on information, including data, quotes, charts, and buy / sell signals contained on this website. Be fully informed about the risks and costs associated with trading the financial markets, it is one of the riskiest forms of investment possible.