DUBAI, United Arab Emirates — The Organization of Petroleum Exporting Countries on Wednesday arrived at a deal after a nearly two-week standoff over its future oil production levels, according to reports by the Wall Street Journal and Reuters.
The temporary but unprecedented gridlock that began in early July saw the United Arab Emirates reject a coordinated oil production plan for the group spearheaded by its kingpin, Saudi Arabia.
Abu Dhabi had demanded that its own “baseline” for crude production — the maximum volume it’s recognized by OPEC as being able to produce — be raised because this figure then determines the size of production cuts and quotas it must follow as per the group’s output agreements. Members cut the same percentage from their baseline, so having a higher baseline would allow the UAE a greater production quota.
The UAE initially called for its baseline to be raised from 3.2 million barrels a day to 3.8 million barrels a day. According to sources cited by the Wall Street Journal, the compromise reached between Saudi Arabia and its smaller neighbor will raise the UAE’s baseline to 3.65 million barrels per day from April onward.
The initial agreement supported by most OPEC delegates set out a plan for the group to collectively bring production up to 400,000 barrels of crude per day monthly through to the end of 2022. This would end the remaining limits that were set in the spring of 2020, as economic recovery and growing demand for oil have brought crude prices up to their highest level since late 2018.
OPEC and the Saudi energy ministry did not reply to CNBC requests for comment.
Read the full report from The Wall Street Journal here.
U.S. ambassador insists America remains the top foreign policy actor in the Middle East
The U.S. Ambassador to the United Arab Emirates Martina Strong believes the U.S. is unequivocally the most important foreign policy actor in the Middle East.
Her comments come roughly one year after President Joe Biden threatened “consequences” for Saudi Arabia after the OPEC kingpin slashed oil production along with its allies against Washington’s wishes.
The U.S. is seeking to orchestrate a delicate balancing act in the region, particularly as it pushes for the normalization of ties between Israel and Saudi Arabia and responds to China’s growing influence.
Saudi Arabia has recently shown signs of steering toward China and Russia after rekindling relations with Iran through Beijing-mediated talks and receiving an invitation to join the emerging economies’ BRICS alliance.
Asked by CNBC’s Dan Murphy whether the U.S. remained the most important foreign policy actor in the region, Strong replied, “Absolutely. I have no doubt about it. Our leadership is really unquestioned and apparent in every, I would say, region of the world — and this is no different.”
Strong said the U.S. is “working very closely together with the UAE and with our other partners here in the region on our core national security priorities as well as our national economic priorities.”
Saudi Arabia’s Crown Prince and Prime Minister Mohammed bin Salman (L), India’s Prime Minister Narendra Modi (C) and U.S. President Joe Biden attend a session as part of the G20 Leaders’ Summit at the Bharat Mandapam in New Delhi on September 9, 2023.
Evelyn Hockstein | Afp | Getty Images
“When it comes to security, President Biden has put forward a very positive, strong vision for our cooperation with the region. It’s based on diplomacy, it’s based on deterrence, de-escalation and, at the end of all this, of course, is prosperity,” she added.
“We’ve been doing that successfully here in the UAE for over 50 years, and we look forward to doing so for many years to come. I would say what is perhaps unique about our partnership with the UAE is how future-oriented and forward-looking that partnership is.”
— CNBC’s Ruxandra Iordache contributed to this report.
Indian energy minister warns of ‘organized chaos’ if oil tops $100 per barrel
Oil prices surged to their highest level in more than a year on Thursday. The U.S. West Texas Intermediate futures reached $95.03 per barrel, marking the highest cost since August 2022.
Manan Vatsyayana | Afp | Getty Images
India’s minister of petroleum and natural gas warned that there’ll be “organized chaos” if oil prices break above $100 per barrel, but said the South Asian nation is well positioned to weather higher costs.
“If the price goes above $100, it’s not going to be in the interest of either the producing country or anyone’s interest. You will have large, organized chaos,” Hardeep Singh Puri told CNBC’s Dan Murphy during a panel at the ADIPEC oil and gas conference in Abu Dhabi, United Arab Emirates on Tuesday.
But “you should not be worrying about the impact on India. India’s a large economy that has a lot of domestic production. We’ll cut back, we’ll do something or the other,” Puri said.
Last week, oil prices surged to their highest levels in more than a year with U.S. West Texas Intermediate futures hitting $95.03 per barrel. Prices have since pulled back, standing at $89.44 a barrel in Wednesday morning trade in Asia.
While Puri was confident that India could navigate higher prices, he warned that other nations may not be able to do so.
“I would worry about what happens to other parts of the developing world … that is really a worrying point,” Puri said, highlighting that rising prices in the last 18 months have placed “100 million people into abject poverty.”
“They had to go from reasonably priced gas and cooking fuels [to] wet wood, coal or whatever they could get. That is the problem.”
Hardeep Singh Puri, India’s minister of Petroleum and Natural Gas, at the ADIPEC conference in Abu Dhabi, United Arab Emirates, on Tuesday, Oct. 3, 2023.
Bloomberg | Bloomberg | Getty Images
The minister said on X, the social media platform previously known as Twitter, that oil producers need to be mindful of the struggles consuming countries face.
“During the pandemic, when crude oil prices crashed, the world came together to stabilize the prices to make it sustainable for the producers. Now, as the world is at cusp of economic recession & slowdown, oil producers need to show [the] same sensitivity towards the consuming countries,” he said in a post.
Puri also said the major energy challenge the world faces is addressing the “trilemma” of availability, affordability and sustainability. He claimed that India has “done well” on energy availability and affordability.
While India — the world’s third-largest oil importer and consumer — set a net-zero goal for 2070, other large economies have far earlier targets. China aims to reach carbon neutrality by 2060. Japan and the U.S. have targets for 2050.
Still, Puri reiterated how India’s sustainable energy transition is taking place at a “more comprehensive scale” and faster than what was originally anticipated.
“When prices shoot up, people’s resolve to transition works faster … There’s a realization that we’ve got to get off our backsides and do things which are important.”
Quick Charge Podcast: October 3, 2023
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