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A higher oil production quota will help to stimulate economic growth in the United Arab Emirates this year, according to a forecast by FocusEconomics cited by the Khaleej Times.
Last year, the UAE produced less oil than it did in 2022, but for this year it negotiated a higher quota with its partners in OPEC+. For the duration of the year, the UAE can produce up to 3.219 million bpd of crude.
Still, that would mean cutting production during the first quarter of the year by some 160,000 bpd, the Khaleej Times report noted. That would be equal to 5% of its average 2023 output.
As the UAE’s oil output fell in 2023, exports of crude oil also declined, data from shipbroker Banchero Costa revealed earlier this month. Per the data, the UAE exported 129.1 million tons of crude oil in the first eleven months of the year. This was down 1.7% from 2022. In that year, the UAE saw a strong rebound in exports, at 15.3% higher than in 2021.
Also in 2022, the UAE’s economy grew at the fastest rate in more than a decade, according to the Khaleej Times, only to slow down in 2023. This should reverse this year, according to FocusEconomics.
“Regional instability is a downside risk, while Opec+ quota changes are a risk in both directions," the economic intelligence provider said.
While regional instability is bad news for the economies in the region as investment destinations, the current situation in the Red Sea has revived the war premium attached to oil prices. On Friday, following strikes by U.S. and UK forces on targets in Yemen, Brent crude briefly topped $80 per barrel. Although it later retreated, the benchmark—as well as West Texas Intermediate—is on the rise as traders await news about possible supply disruptions.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com