The war to control market share of the global oil supply intensified today as the United Arab Emirates announced that it planned to increase production capacity.
“In line with our production capacity growth strategy … we are in a position to supply the market with over four million barrels per day in April,” Sultan Ahmed Al-Jaber, the UAE’s Abu Dhabi National Oil Company’s (ADNOC) group chief executive, said in a statement, as reported by WAM state news agency. “In addition, we will accelerate our planned five million bpd (barrels per day) capacity target,” the statement said.
The move by the U.A.E., a close ally of Saudi Arabia, comes after the alliance between the OPEC cartel ended acrimoniously, when Russia refused to agree to deep production cuts in a pact that has propped up prices since 2016.
Following the failed talks, Riyadh boosted capacity to 13 million barrels a day as the Kingdom threw down the gauntlet in negotiations with Moscow. In response, Russia said the country’s oil companies might boost output by up to 300,000 bpd and could increase it by as much as 500,000 bpd.
“I view the string of announcements from Saudi Arabia as upping the ante in the poker game that the kingdom is playing with Russia,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA, to Bloomberg. “The Saudi end-goal, in our view, is to demonstrate that a cooperative solution seeking price stability is the best outcome rather the pursuit of market share.”
Russia indicated on Tuesday it was ready for more talks, but Saudi Arabia said there was little point if fresh discussions simply confirmed their inability to reach a deal.
At the time of post, Brent Crude was at $35.70 a barrel, a decrease of more than 45% since the start of the year.
Source: Equities News