The oil market fluctuates violently!The UAE’s withdrawal from OPEC is an oolong
News from the Financial Associated Press on March 4 (edited by Xia Junxiong)The crude oil market experienced a dramatic scene on Friday. First, the “Wall Street Journal” reported that the UAE was considering withdrawing from OPEC (Organization of Petroleum Exporting Countries), which caused international oil prices to fall by nearly 3%. Then Reuters reported that the UAE was considering withdrawing from OPEC. Oil prices also recovered all lost ground.
(Source: British Finance) The Wall Street Journal reported on Friday citing sources that the UAE is discussing whether to withdraw from OPEC due to deepening differences with Saudi Arabia.
Although Saudi Arabia and the UAE are formally allies, the two countries have differences in many areas, including oil production capacity, foreign investment and the conflict in Yemen. These differences have been discussed behind closed doors in the past, but are now increasingly more openly.
The report also noted that the UAE leadership has discussed withdrawing from OPEC for years without taking any action, but UAE officials say recent disagreements with Saudi Arabia have reignited that idea.
After the Wall Street Journal report sent oil prices lower, Reuters reported that a source with direct knowledge of the matter said reports that the UAE was considering withdrawing from OPEC were far from the truth.
As one of the most influential cartels in the world, OPEC currently has a total of 13 member countries, and Saudi Arabia has always firmly grasped the organization’s largest voice by virtue of its oil production capacity significantly exceeding that of other member countries. The United Arab Emirates is the third largest oil producer in OPEC and is an Arab country in the Gulf region like Saudi Arabia. They are often called brothers on the international stage. Therefore, even if the two countries have differences on energy issues, most of them will choose to resolve them behind closed doors.
OPEC+ announced in October last year that in order to stabilize international oil prices, it will cut 2 million barrels per day of crude oil production capacity from November 2022 to the end of 2023, which accounts for about 2% of global demand. OPEC+ is an alliance of countries including OPEC and Russia.
OPEC+’s decision to cut production has been severely criticized by the United States and other countries. Some members of the U.S. Congress said that Saudi Arabia is allied with Russia and accused Saudi Arabia of coercing some OPEC+ members to support the production reduction target, which Saudi Arabia has denied.
Publicly, the UAE has backed the OPEC+ production cuts. But the Wall Street Journal reported on Friday that U.S. officials said the UAE had privately indicated that they were willing to follow U.S. wishes to increase production, but that Saudi Arabia had resisted.
According to the report, the UAE is worried that its own interests will be damaged by Saudi Arabia, and Saudi Arabia is worried that the UAE poses a threat to its dominance in the Gulf region.
