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UAE sticks to OPEC oil quota despite Libya cuts
Abu Dhabi holds more than 90 percent of the UAE's oil reserves.
March 2, 2011 3:58 by Reuters
The United Arab Emirates, OPEC’s third-largest oil exporter, continues to produce oil within its OPEC quota despite Libyan supply disruptions that led Saudi Arabia to pump more oil, an official told Reuters on Wednesday.
“The UAE is producing within its OPEC quota,” an industry official told Reuters. Production is still in the range of 2.3 million barrels per day (bpd), while total capacity is around 2.8 million bpd, he said.
Abu Dhabi holds more than 90 percent of the UAE’s oil reserves, which are tapped by state-owned Abu Dhabi National Oil Company (ADNOC).
“The market is already well supplied, and with the extra supply coming from some OPEC countries there might be a risk of over flooding the market. That’s why the UAE is not producing more,” said an official from ADNOC under condition of anonymity.
OPEC’s leading exporter has promised it will provide enough oil to make up for any lost because of disruptions in OPEC member Libya. On Monday, a senior Saudi source told Reuters that the kingdom had upped its output to 9 million bpd.
In its most recent oil allocations report, ADNOC said it had lifted cuts in allocations of Lower Zakum, Umm Shaif and Upper Zakum crudes in April. The UAE often changes supply levels depending on customer needs, said the official.
“This does not mean the ADNOC has increased its output, and if we have a cut in one month, we might not have one in the next, but over the year it all balances out,” the first official added.
Gulf oil traders said, however, that an increase of UAE supplies would not come as a surprise, given that a number of OPEC members in the Gulf had expressed the need to calm the market.
“It wouldn’t be a total shock to me that the UAE may have increased output, but right now it’s really too early to tell,” said a Dubai-based crude trader.
Another trader also said output in Kuwait, another regional OPEC producer with spare capacity, might increase.
Oil prices hit a record high above $147 a barrel in July 2008, but OPEC producers have fresh memories of how quickly they plunged from those levels to lows near $33 a barrel six months later as the global economy fell into a tailspin.
Unrest in the region pushed oil prices last week to a 2-1/2 year high of nearly $120 a barrel , a level potentially damaging to the world economy and far above the range of $70-$80 that Saudi Arabia has repeatedly said it favours.
Prior to unrest in Tunisia and Egypt in January, OPEC members considered the world market to be amply supplied, and only as some Libyan output was shut in during recent days did Saudi Arabia move to stem oil’s surge by pumping more.
(Reporting by Amena Bakr; Editing by Joshua Schneyer and Jane Baird)