UAE cuts crude output after August overproduction

The UAE cut its crude production by 214,000 b/d to an average of 2.48mn b/d in September, having over-produced against its Opec+ commitments in August, a source close to state-owned Adnoc said.

"Exports dropped significantly in line with the previous commitments and accelerated compensation for August overproduction, which started during September," the source said.

The September average is 114,000 b/d below the UAE's Opec+ quota of 2.59mn b/d.

UAE production was 2.69mn b/d in August, around 100,000 b/d above its quota. Energy minister Suhail al-Mazrouei has said this was because of the need to produce additional associated gas to meet increased domestic power demand.

Adnoc has notified its term crude customers that it will apply a 25pc nomination cut to all grades — light sour Murban crude, Das and Umm Lulu, and medium sour Upper Zakum — in November. This follows a 30pc cut in October, and compares with only 5pc cuts for all crude exports from July to September. Adnoc produces almost all of the UAE's crude.

The Opec+ group has been pushing for 100pc compliance with the deal and for countries to make up for any overproduction by the end of the year. The 23-member alliance eased its collective output cut from 9.7mn b/d in May-June and 9.6mn b/d in July to 7.7mn b/d for the rest of this year. The UAE sits on the group's Joint Ministerial Monitoring Committee (JMMC), which oversees adherence to quotas. During its most recent meeting on 17 September, Mazrouei said that the UAE will do its best to reach 100pc conformity for September, before deepening its cuts in October and November to make up for its under-compliance to date.

By Adal Mirza