UAE joins oil price war via plan to up output in April 2020
The United Arab Emirates (UAE) has joined the oil price war through Wednesday's announcement of its plan to ramp up crude oil production by around 1 million barrels per day (bpd) starting from April.
"In line with our production capacity growth strategy announced by the Supreme Petroleum Council, we are in a position to supply the market with over 4 million bpd in April," the UAE's state-owned Abu Dhabi National Oil Company (ADNOC) said in a statement.
"In addition, we will accelerate our planned 5 million bpd capacity target," it added.
The UAE, a member of OPEC, produced approximately 3.03 million bpd of crude oil in January, according to OPEC's Monthly Oil Market report for February.
The Gulf nation's decision comes after both OPEC leader Saudi Arabia and non-OPEC member Russia failed to reach a deal on Friday to curb their production levels to support prices.
While the failure to reach a deal caused a slump in oil prices on Monday when prices fell to their lowest levels in four years, both heavyweights over the past two days announced their intention to ramp up their production levels -- a move to preserve or increase their market share.
On Wednesday, Saudi Arabia ordered its national oil company Saudi Aramco to increase its crude oil output capacity by 1 million bpd. On Tuesday, Russia said it might boost its crude oil production by 250,000300,000 bpd in the short term, and up to 500,000 bpd in the longer term.
Government- runAdnoc can also draw on reserves it stores in the emirates of Abu Dhabi and Fujairah as well as outside the U.A.E. It has around 8.2 million barrels of oil storage capacity at Kiire in Japan and 5.9 million barrels of capacity in Mangalore, India.
The U.A.E.’s pledge to raise output follows promises by Saudi Arabia and Russia to ramp up supply after the spectacular collapse of talks last week. The failure of Saudi Arabia and Russia to agree on cutting output has given way to a pump-at-will race to start once the current OPEC+ supply deal expires end of this month.
Oil War Escalates Again as Saudi, U.A.E. Promise More Supply
Like the U.A.E., Saudi Arabia can use oil from its storage facilities to keep crude flowing to the market. Aside from domestic stockpiles, the kingdom also stores crude near consumption hubs in Rotterdam, Okinawa and the Egyptian port of Sidi Kerir. Russia doesn’t have a network of strategic oil stocks to match.
Adnoc is also accelerating existing plans to raise output capacity to 5 million barrels a day, it said in a statement on Wednesday, without specifying a date.
The company previously targeted increasing capacity to 4 million barrels a day by the end of this year and to 5 million a day by 2030. The U.A.E.’s production capacity is 3.5 million barrels a day, according to the IEA.
Adnoc intends to publish forward pricing for March and April crude sales “shortly,” the company said. Iraq and Kuwait have followed Saudi Aramco’s lead in cutting pricing for their crudes for next month.
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