UAE says no deal yet on Opec+ impasse

The UAE said today that a deal to resolve the two-week impasse in Opec+ oil policy beyond this month has yet to be reached, although coalition delegations flagged progress in discussions.

Several delegates said that talks have taken place between Opec's de factor leader Saudi Arabia and the UAE, and that the possibility has been floated of adjusting the UAE's production baseline — which determines group member quotas and their compliance with the Opec+ output deal — to 3.65mn b/d. The UAE accepted a reference level of 3.168mn b/d when the Opec+ coalition's two-year deal was agreed last May.

Abu Dhabi has blocked a proposal to extend the Opec+ agreement past its April 2022 expiry until December next year unless its baseline is shifted to better reflect increases in UAE production capacity. The output policy strategy also included 400,000 b/d collective increases each month in the August 2021-December 2022 period, with the option of a three-month stoppage. The deal would expire in September next year if that clause is not invoked.

Any agreement would be subject to a vote of all Opec+ members. A date for a meeting to replace the one cancelled earlier this month has yet to be scheduled. Delegates earlier this week mentioned the possibility of one in the short term. Some Opec+ delegates had signalled that conceding to the UAE request could potentially open a Pandora's box, inviting each member country to request exceptions to their commitments.

The front-month September Ice Brent contract today briefly lost nearly $1/bl in intraday trade, but has recovered some of that to trade around $76.18/bl.

By Nader Itayim, Ruxandra Iordache and Rowena Edwards