UAE Officials Deny Report They're Considering Quitting OPEC

The United Arab Emirates has no plans to leave the OPEC alliance, officials said on condition of anonymity, denying a report that sent oil prices tumbling.

The Wall Street Journal reported earlier that a growing rift with Saudi Arabia meant the UAE was discussing quitting the producer group, a move that would potentially leave it free to lift output.

The UAE has said publicly and privately it is sticking to a deal with fellow members of the OPEC+ alliance that will remain in effect for the rest of this year. Brent crude futures, after initially plunging as much as 2.8% on the WSJ’s report, subsequently pared losses to trade above $85 a barrel.

Abu Dhabi has for some years contemplated what alliances best suit its long-term interests, as it seeks to monetize increases in production capacity. That project brought it into conflict with Saudi Arabia and other OPEC+ nations two years ago, igniting a feud that almost splintered the entire coalition, though a compromise was found.

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Earlier this year, RBC Capital Markets LLC said that Abu Dhabi might push for a higher production OPEC+ quota, given that its current target of about 3 million barrels a day is well short of official capacity levels of more than 4 million.

State-run Abu Dhabi National Oil Co. is investing billions of dollars on a further jump in capacity to 5 million barrels a day, which is expected to take until 2027.

Sultan Al Jaber, chief executive officer of Adnoc and an influential figure in the emirate, is “looking to monetize the substantial investments” in production capacity, RBC said.

Nonetheless, there aren’t yet any signs that the UAE’s aspirations put it on an imminent collision course with the rest of the Organization of Petroleum Exporting Countries. 

If the UAE did suddenly leave OPEC, it would risk a political fallout not just with Saudi Arabia, one of its biggest trading partners, but with other Gulf allies such as Kuwait and Iraq.

Last month UAE Energy Minister Suhail Al Mazrouei, speaking to Bloomberg television in Dubai, reiterated that the country remains committed to OPEC+ production for the rest of 2023.  

--With assistance from Grant Smith and Paul Wallace.