The UAE and Saudi Arabia's oil production is nearing their limit, French President Emmanuel Macron told his U.S. counterpart during the G7 meeting this week.
The French president was referring to a conversation he had with the rule of the Emirates, as caught by Reuters. According to the cited conversation, the UAE was already "at maximum," Macron told Biden. Whether that was referring to the maximum as allowed by OPEC quotas or maximum capacity remains unclear.
"And then he [Sheikh Mohammed bin Zayed al-Nahyan] said (the) Saudis can increase by 150 [thousand barrels per day]. Maybe a little bit more, but they don't have huge huge capacities before six months' time," Macron also said, as quoted by Reuters.
Saudi Arabia's production quota was raised 114,000 bpd in June and will be raised another 170,000 bpd in July, but the OPEC quota expires well before six months, at the end of August—after which time Saudi Arabia would be free to ramp up production as it sees fit.
Bloomberg later quoted the UAE's oil minister, Suhail al Mazrouei, as saying that the UAE was in fact pumping close to the baseline set for it by the OPEC+ agreement. This baseline for the Emirates was 3.168 million bpd.
"In light of recent media reports, I would like to clarify that the UAE is producing near to our maximum production capacity based on its current OPEC+ production baseline," Al Mazrouei said, as quoted by Reuters.
The news about Saudi Arabia is potentially more worrying as the Kingdom is believed to have more than 1 million bpd in spare capacity that can be tapped within three months.
If it can indeed only add 150,000 bpd to current levels of production as dictated by capacity, this means the world's spare oil production capacity is much smaller than previously believed by every big energy agency, including the EIA and the IEA.
The Kingdom is currently producing around 10.5 million bpd. According to OPEC's latest monthly production report, its average for May was 1.424 million bpd, and this month's should be higher in keeping with the production recovery deal in OPEC+.
OPEC's number-one has a nameplate production capacity of 12 million barrels daily and plans to boost this by about a million barrels daily. The UAE's nameplate capacity, according to Reuters, is 3.4 million bpd, and the Emirates are planning to expand this to 4 million bpd.
By Irina Slav for Oilprice.com
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