Otaiba’s comments caused oil prices to fall like a rock on Wednesday. U.S. oil fell 12% to $ 109 a barrel. Worldwide Brent crude was down 13% at $ 111 a barrel. This marked their one-day decline in almost two years.
A key problem for the Saudi-led group: Russia is one of those friendly manufacturers.
Last Wednesday, OPEC + said it would increase production by 400,000 barrels a day in April – a fraction of Russia’s 10 million barrels a day of crude oil production. Despite the 30% increase in oil prices over the past two weeks, the cartel called the market “well balanced”.
“The United Arab Emirates is cracking down. They were one of the last to stop,” Robert Yower, future vice president of energy for Mizuho Securities, told CNN. “Now that they said it, you can expect Saudi to say the same thing.”
The Biden administration on Tuesday banned Russia’s crude and natural gas imports, but Europe, which receives more Russian energy than the United States, did not. However, concerns about sanctions on Russian banks and its ability to send oil have led to a shadow ban on the country’s energy sector, drastically reducing the amount of Russian oil supplied to the global market.
Western nations believe oil can be added from other sources, including OPEC members Iran and Venezuela.
OPEC, by contrast, has the potential to rapidly increase supply as it has spare parts production capacity in Saudi Arabia and the United Arab Emirates.
“We want to increase production and encourage OPEC to consider higher production levels,” Otaiba said.
“The UAE has been a reliable and responsible energy supplier to global markets for over fifty years, and believes that stability in energy markets is key to the global economy,” Otaiba said.
Europe will no longer rely on Russia
OPEC’s music change can come from a sense of its unique opportunity. This would force Europe to withdraw from Russian oil and buy OPEC crude.
“The UAE is mainly saying to Saudi Arabia and Kuwait, ‘We will use our spare capacity so that Europeans no longer have to trust Russia,” said Andy Lipo, head of the Lipo Associates consulting firm.
“This is a 180-degree turning point,” said Lipov, referring to OPEC’s market position.
Lipov added that OPEC leaders may remember what happened when oil soared above $ 145 a barrel in 2008, just months after the global economy plunged into the midst of a financial crisis.
“You can turn the world into a recession,” Lipov said.
The sharp decline in oil prices improves the outlook for pump prices. According to the AAA, the national average rose to $ 4.25 a gallon on Wednesday, up 60 cents a week.
Instead of reaching $ 4.50 a gallon, Libo said current oil prices would be above the national average of $ 4.35 a gallon.
– Matt Egan of CNN contributed to this report
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