Reuters: Saudi Arabia and UAE may increase oil production in case of crisis
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Saudi Arabia and the UAE can significantly increase oil production, but they will do so only in the event of an acute supply crisis, informs Reuters.
“Due to the fact that this winter there will probably be no gas in Europe, and a ceiling on Russian oil prices may be set by the new year, we cannot now throw every barrel on the market,” one of the agency’s sources said.
According to sources, the reserve capacity of Saudi Arabia, the UAE and some other OPEC countries is approximately 2-2.7 million barrels per day.
The day before, the participants in the OPEC + deal decided to increase oil production in September by 100,000 barrels per day, within the quota, Russia and Saudi Arabia will be able to add 26,000 barrels per day.
The new increase is an unplanned increase. In early June 2022, OPEC+ countries redistributed quotas for a gradual increase in oil production. According to this adjustment, in July and August, oil production should have increased by 648,000 barrels per day each month. Prior to this, it was assumed that production would increase from May to September by 432,000 barrels per day on a monthly basis. But in June, OPEC+ spread out the September quota for the last two months of the summer. Thus, without new adjustments, production quotas would not have increased in September, but now OPEC+ has allowed itself to produce additional oil.
In the final communiqué, the OPEC+ countries stressed that excess capacity to increase production is “extremely limited” and a chronic lack of investment in the oil sector has reduced production capacity “along the value chain.”
Later, Deputy Prime Minister Alexander Novak said that the oil market is quite balanced and has recovered to pre-pandemic levels. The OPEC+ decision will help meet growing demand, he said, noting that the situation in the oil market remains uncertain due to possible breaks in supply chains amid sanctions on Russian oil and petroleum products.
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