The United Arab Emirates (UAE) is reported to be backing the move by Saudi Arabia to flood the market with product, as the price war between Saudi and Russia continues. The price war which began a few days ago, has seen crude price dropping to its lowest for over 30years.
According to the report obtained from Reuters, both the UAE and Saudi Arabia on Wednesday promised to raise oil output to a record high in April, as the two OPEC producers raised the stakes in a standoff with Russia that has hammered global crude prices.
The extra oil the two Gulf allies plan to add is equivalent to 3.6% of global supplies and will pour into a market at a time when global fuel demand in 2020 is forecast to contract for the first time in almost a decade due to the coronavirus outbreak, the report added.
Crude prices have almost halved since the start of the year on fears OPEC states would flood the market in its battle with Russia after Moscow rejected OPEC’s call last week for deep output cuts and a pact on cutting output that has propped up prices since 2016 collapsed.
Saudi Arabia, which has already announced it would hike supplies to a record 12.3 million barrels per day (bpd) in April, said on Wednesday it would boost production capacity for the first time in more than a decade.
UAE national oil company ADNOC said in its announcement that it would raise crude supply to more than 4 million bpd in April and would accelerate plans to boost its capacity to 5 million bpd, a target it previously planned to achieve by 2030.
By raising supplies, Riyadh and Abu Dhabi will add a combined 3.6 million bpd of extra oil in April to a market already awash with crude, compared to their existing output that has been limited by the pact with Russia that expires in March.
In addition, Moscow has said Russian oil firms might boost output by up to 300,000 bpd and possibly as much as 500,000 bpd.
Russian Energy Minister Alexander Novak said on Wednesday raising output was “not the best option” and said Moscow was still open to dialogue with the Organization of the Petroleum Exporting Countries
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OPEC member Algeria said intense discussions were underway and UAE Energy Minister Suhail al-Mazrouei called for a new pact on supplies. But Saudi Arabia said on Tuesday talks were pointless unless they were going to lead to a deal.
State-run Saudi Aramco plans to raise capacity to 13 million bpd from 12 million bpd, Chief Executive Amin Nasser said, adding that the move was ordered by the Energy, Reuters added.
Clearly, this is not a piece of good news for Nigeria, who is said to have allegedly, over 20 Cargo of Crude stranded on the sea, due to coronavirus. The President is also yet to inaugurate a committee to discuss the situation on the ground, as the crude prices could crash further, even with the 8% increase on Tuesday.