Saudi Arabia, UAE to increase oil output in case of winter supply crisis - report

i24NEWS - Reuters

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Saudi Energy Minister Prince Abdulaziz bin Salman al-Saud (R), chairing a virtual meeting of the Organization of the Petroleum Exporting Countries in Riyadh, Saudi Arabia, on April 9, 2020.
AFP PHOTO/ HANDOUT/ SAUDI PRESS AGENCY/SPASaudi Energy Minister Prince Abdulaziz bin Salman al-Saud (R), chairing a virtual meeting of the Organization of the Petroleum Exporting Countries in Riyadh, Saudi Arabia, on April 9, 2020.

Sources say that Saudi Arabia and the UAE possess nearly 2.0-2.7 million bpd of spare production capacity

Saudi Arabia and the United Arab Emirate, both leaders of the Organization of the Petroleum Exporting Countries (OPEC), are reportedly ready for a “significant increase” in oil output, saving it for a possible winter supply crisis.

Despite the OPEC+ decision earlier on Wednesday to raise oil production by only 100,000 barrels per day (bpd), Reuters cited three sources, speaking on condition of anonymity, that claimed that Saudi Arabia and the UAE are ready to pump “significantly” more but only in case of a worsening global supply crisis. 

"With possibly no gas in Europe this winter, with a potential price cap on Russian oil sales in the New Year, we can’t be throwing every barrel on the market at the moment," one of the sources was quoted as saying.

"The only time we can prove we have more spare capacity is when it comes to a long-lasting crisis," the source added, noting that it could happen as soon as this coming winter, as the tensions between Russia, a member of OPEC+, and the West over Moscow's invasion of Ukraine keep worsening.

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According to the sources, Saudi Arabia and the UAE along with some other OPEC members possess nearly 2.0-2.7 million bpd of spare production capacity, despite the cartel’s latest statement claiming “the severely limited availability” of spare capacity. 

The Ukraine war, which led to unprecedented international sanctions against Moscow, brought European gas prices to records with Brent crude reaching 14-year-highs. The following inflation hit many countries, including the US, with President Joe Biden struggling to convince OPEC+ members to increase oil supply during his trip to Saudi Arabia in July. 

However, the cartel announced Wednesday one of the smallest increases since 1982, when the quotas were first introduced, as a “goodwill gesture,” according to one of the sources, cited by Reuters. 

"It is small, yes, but it shows that OPEC+, given the fact that it includes so many countries, like Russia, Iran, Venezuela with all their grievances, managed to garner consensus and move forward," the source underlined. 

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