The UAE Minister of Energy and Industry, Suhail al-Mazrouei, comes to the 177th meeting of the Organization of Petroleum Exporting Countries (OPEC) in Vienna, Austria on December 5, 2019.
JOE KLAMAR | AFP | Getty Images
The United Arab Emirates pushed back the OPEC + leaders Saudi Arabia and Russia and claimed their “sovereign right” to negotiate fairer conditions for increasing oil production.
“It wasn’t a good deal for us,” United Arab Emirates’ Energy and Infrastructure Minister Suhail Al Mazrouei told CNBC’s Hadley Gamble, referring to the OPEC + production cuts, which are at a “production level that will run until 2018 goes back ”.
“We knew that the UAE’s position in this agreement was the worst when you compare our current capacity with production levels,” he said on Sunday.
“But an agreement is an agreement.”
When asked whether the United Arab Emirates were ready to resign, the minister said: “We cannot renew the agreement or conclude a new agreement on the same terms. We have the sovereign right to negotiate.”
The comments come after the UAE blocked some aspects of an OPEC + proposal to increase production on Friday in order to seek better terms for itself.
“Let’s increase production and talk about the extension and the agreement and the terms and conditions at a later meeting,” he said, adding that the UAE unconditionally supports an increase in supply.
“We meet on Monday and I think we all agree that we have to do something to increase production,” said Al Mazrouei. “The problem is one condition for this increase, namely the extension of the agreement,” he added.
The high stakes confrontation comes when oil prices rise above $ 75 a barrel for the first time in two years. Failure to reach an agreement on Monday could jeopardize the market recovery and even dissolve the fragile OPEC + alliance if the impasse remains unsolved.
“We have plenty of time to meet and discuss the terms and conditions of the extension with justification, which independent bodies can call for review,” he said. “I still hope that we will separate the two decisions by Monday,” he added.
The United Arab Emirates threatened to leave OPEC late last year, and an exit would almost certainly trigger a repeat of the OPEC + price war that drove oil prices to $ -40 in April last year.
“It is neither wise nor a goal for anyone to raise prices to levels that the global economy cannot handle,” he said. “We believe we have to do it and we have to do it for August,” added Al Mazrouei.
At the heart of the current proposal is a plan to increase production by 2 million barrels per day (mb / d) between August and December at monthly rates of 400,000 barrels per day. OPEC + also plans to extend its production cut agreement from April 2022 to December 2022.
“Now we think that it is just not realistic to link the extension of the agreement with a reference that goes back to 2018 and for a period from 2022, as that is four years,” said Al Mazrouei.
“That’s totally unfair.”
The United Arab Emirates have invested billions in their oil exploration capabilities to increase production. With Iran also returning to the oil market in the coming months, the UAE sees good scope to review the conditions.
“The UAE’s crude oil production was 3.160 mb / d in October 2018. However, in April 2020 it rose to 3.841 mb / d. By changing the base, the UAE can drastically and instantly increase their production, ”tweeted Anas Alhajji, Managing Partner at Energy Outlook Energy Consultant.
“They don’t want the OPEC + deal to limit their production and potential,” he added.
As possibly another sign of a strain on the relationship, Saudi Arabia decided late Friday, citing the pandemic, to restrict travel to the UAE.
When asked about the White House’s silence on the production group’s internal dispute, Mazrouei replied, “Happy Fourth of July”.