OPEC + seeks consensus on oil policy as UAE demands changes

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  • UAE unhappy with deal extension until end of 2022, sources say
  • New deal could ease oil cuts by 2 million bpd by December

LONDON / DUBAI / MOSCOW, July 2 (Reuters) – An OPEC + deal to release more oil into the market and extend its supply management policy until the end of 2022 depends on the UAE deal ( UAE), who opposed it and pushed the talks to a second day, OPEC + sources said.

The UAE effectively blocked an agreement between major producers Saudi Arabia and Russia on Thursday to ease oil cuts by 2 million barrels per day (bpd) by the end of 2021 and to extend the remaining reductions until December 2022 from April 2022.

OPEC + sources have said that the UAE – although it has not opposed the increase in production – maintains that the new agreement must recognize that the UAE has higher production from from which cuts are made.

He says he had previously accepted a very low benchmark figure as a gesture of goodwill and in the hope that the reduction would end in April 2022, as had been agreed in April 2020.

OPEC + sources have said the UAE wants benchmark production set at 3.8 million barrels per day compared to 3.168 million barrels per day currently. A higher baseline means a lower actual cut.

The UAE has ambitious production growth plans and has invested billions of dollars to increase capacity. The supply pact, however, left around 30% of the UAE’s capacity unused, according to sources familiar with UAE thinking.

In response to the destruction of oil demand caused by the COVID crisis, OPEC + agreed last year to cut production by nearly 10 million barrels per day from May 2020, with the intention of phase out restrictions by the end of April 2022.

The cuts now stand at around 5.8 million bpd and, if the UAE blocks the deal altogether, could remain in place and trigger a further surge in oil prices amid a rapid recovery in demand for oil. oil and a crude oil shortage.

On Friday, Brent crude was trading near 2.5-year highs above $ 75 a barrel.

Report by the OPEC team Writing by Dmitry Zhdannikov Editing by David Goodman

Our Standards: Thomson Reuters Trust Principles.

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