Oil prices fell after the United Arab Emirates called for an increase in OPEC production

Youssef al-Ottaiba, the United Arab Emirates’ ambassador to Washington, told CNN on Wednesday that the country wants to increase. Oil production And the Organization of the Petroleum Exporting Countries (OPEC) to promote cartel distribution.

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.

If the UAE persuades its allies to run Spicodes, it will happen Mark a turn For Cartel, at a meeting with its partner manufacturers last week – a group called OPEC + – agreed to stick to a plan to gradually add oil to the market, easing prices despite the pressures of developed economies.

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.

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Western nations believe oil can be added from other sources, including OPEC members Iran and Venezuela.

That was before sanctions were imposed on Iran About 4 million barrels were produced per day. But the United States has returned to a nuclear deal with that country Proven elusive. The United States has begun negotiations with Venezuela to allow crude oil in 2019. But the economically weak South American country did not produce much oil before the embargo.

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 Energy Ministry did not release a statement, but Otaiba’s comments were tweeted by the country’s embassy in Washington. This is the first indication that an OPEC country may be prepared to keep oil prices out of control. Some economists fear that drivers, airline passengers and businesses may start up Change their buying behavior If oil rises further, it will damage the world economy.

“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.

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“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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