Saudi Arabia, Russia and five other OPEC+ countries are meeting today for their first decision on oil production quotas since the United Arab Emirates abruptly left the bloc last week.
OPEC+ — the bloc of the Organization of the Petroleum Exporting Countries and ten other producing countries — has not commented on the UAE's withdrawal, announced on Tuesday, despite the fact that the country was a pillar of the Organization and one of the two member countries most likely to increase the amount of oil it pumps.
As a result, the press release of the meeting, which is being held online, is expected with even more caution than the OPEC+ decision itself, which the market was already anxiously awaiting.
In total, Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria and Oman are expected to increase their quotas "by 188,000 barrels per day", explains Arn Loman Rasmussen, an analyst at Global Risk Management.
It will therefore be a similar increase to the one announced in March and renewed in April, from which the share of the increase that came from the United Arab Emirates must be subtracted.
Production in decline
But this increase on paper is unlikely to translate into extra production: OPEC+'s main spare capacity is in the Gulf countries, whose exports are hampered by Iran's blockade of the Strait of Hormuz since the start of the war in the Middle East.
In the OPEC+ countries subject to quotas, production "fell to 27.68 million barrels per day in March", while the sum of their quotas for the same month was forecast at 36.73 million barrels per day, "a deficit of about 9 million barrels per day", explains Priya Wallia, an analyst at Rystad Energy.
Saudi Arabia, Iraq, Kuwait and of course the United Arab Emirates are facing problems in oil exports.
Russia, the bloc's second-largest producer, is the one benefiting most from the situation and increased energy prices, but it already seems to be struggling to meet its current quotas. The Russian oil industry is facing Western divestment after its invasion of Ukraine in 2022 and production problems due to Ukrainian drone strikes.
OPEC+ weakened
For the bloc, the UAE's withdrawal is "an important event", even more serious than Qatar's withdrawal in 2019 and then that of Angola, according to Amena Makr, an analyst at Kpler.
In addition to being OPEC+'s fourth-largest producer, Abu Dhabi has large untapped production capacities, a major lever for the bloc when it needs to regulate the market.
As early as 2021, "the United Arab Emirates had expressed its strong dissatisfaction with its quotas," Bakr underlines.
The country has made significant investments in its infrastructure in recent years, and national oil company Adnoc plans a production capacity of 5 million barrels per day by 2027, well above its previous quota of 3.447 million barrels per day.
"They already have a sustainable capacity of 4,3 million barrels per day" and aspire to increase it to 5 million barrels per day by 2027, Francis Perrin, a researcher at IRIS, told AFP.
This makes Abu Dhabi a competitive player in the market, one that is also capable of producing at a very low cost and that could limit the impact of the measures taken by Riyadh and its allies once the market returns to some normality after the opening of the Strait of Hormuz.
For OPEC+, the risk is also that other countries may be tempted to leave: Kazakhstan and Iraq, for example, have already come under criticism repeatedly for exceeding their quotas.
capital.gr
