UAE Oil Exports Set to Decline

WPB: The United Arab Emirates (UAE), a key member of OPEC+, is planning to reduce its oil exports early next year as part of the group’s efforts to enforce stricter discipline on production cuts and support oil prices.

According to companies with contracts for UAE oil, the Abu Dhabi National Oil Company (ADNOC) has reduced the allocation of oil shipments for some customers in Asia. The total reduction across various crude grades amounts to as much as 230,000 barrels per day.

Oil traders have closely monitored UAE supply volumes in recent months, as the country and its allies in OPEC+ have worked to defend oil prices. Brent crude prices have dropped 16% since early July, currently trading near $74 per barrel.

While data compiled by OPEC+ suggests the UAE is largely adhering to its production quota of 2.912 million barrels per day, some traders remain skeptical. Estimates from the International Energy Agency (IEA) indicate that the UAE’s actual production could be significantly higher.

Abu Dhabi is eager to expand its oil production capacity, maximize revenues, and capitalize on billions of dollars invested in the sector. ADNOC claims it can produce up to 4.85 million barrels per day, nearly 2 million barrels above the ceiling set by OPEC+.

The UAE’s determination to utilize its production capacity has led to tensions with Saudi Arabia in recent years, occasionally threatening the cohesion of the OPEC+ alliance. However, compromises have consistently been reached among the group’s major members.

OPEC+ leadership has pressured several members, particularly Iraq, Kazakhstan, and Russia, for failing to meet their agreed production cuts at the beginning of the year. These countries have repeatedly pledged to improve compliance. While they have shown notable progress in recent months, they have yet to implement the additional reductions promised as compensation for earlier overproduction.

Two weeks ago, OPEC+ decided to postpone its planned production increases for the third time, citing weak Chinese demand and rising output from non-OPEC producers. The group now plans to begin its production increases in April, at a slower pace than previously outlined.

As a sign of its commitment to the group’s goals, Abu Dhabi agreed to delay an additional production increase of 300,000 barrels per day.

The IEA estimates that the UAE’s actual production is around 3.25 million barrels per day, rather than the reported 2.912 million. Bloomberg’s tanker tracking data suggests that UAE oil exports alone could reach 3.86 million barrels per day, hinting at higher production levels.

By Bitumenmag

Oil, Barrels, Exports, Bitumen