UAE hikes oil output to aid market stability

Output capacity by year end will be 3.5m barrels a day, energy minister says

The UAE has begun to increase oil production in the third quarter and expects further increases through this month and November in line with the market requirements, according to a tweet by UAE Energy Minister Suhail Al Mazroui.

“The UAE remains committed to working with its Opec (Organisation of Petroleum Exporting Countries) and non-Opec partners, to ensure balance and stability in the market in the interests of both producers and consumers,” he said.

Al Mazroui also said the UAE’s production capacity by year-end 2018 will be 3.5 million barrels per day, and December’s production will be subject to customer demand.

Opec member countries and non-Opec countries like Russia are increasing production to stabilise prices that have been rising due to supply concerns following the reimposition of sanctions on Iran by the US, as well as falling production by Venezuela.

Brent, the global benchmark for crude oil, is currently trading above $82 (Dh301) per barrel after touching a four-year high of above $86 per barrel earlier this month. US crude West Texas Intermediate was at $72.46 per barrel at around 11:30am UAE time yesterday.

Saudi Arabia, the de facto Opec leader, is also raising its output to offset falling Iranian oil production. Crown Prince Mohammad Bin Salman told Bloomberg in a recent interview that the kingdom is fulfilling promises to make up for Iranian crude supplies lost to the US sanctions. “The request that the US made to Saudi Arabia and other Opec countries is to be sure that if there is any loss of supply from Iran, we will supply that,” he had said. “And that happened. We export as much as two barrels for any barrel that disappeared from Iran recently.”

Ehsan Khoman, head of MENA Research and Strategy at MUFG Bank in Dubai, said: “The overarching concern is that spare production capacity remains at historically low levels and the inventory excess, which was providing markets a buffer, is becoming depleted.”