The United Arab Emirates (UAE), currently OPEC's third-largest producer, breached its OPEC+ oil production quota by a massive 520,000 barrels per day (bpd) in August, data from the International Energy Agency (IEA) showed on Tuesday, suggesting that one of Saudi Arabia's allies in 'leading by example' in the deal could be the cartel's new compliance headache.
According to IEA's Oil Market Report, cited by Bloomberg, the UAE pumped 3.11 million bpd in August, up by 240,000 bpd from July and 520,000 bpd above its ceiling of 2.59 million bpd as per the OPEC+ deal.
Using tanker-tracking data, the IEA estimated that OPEC's third-largest producer exported as much as 2.7 million bpd in August, stockpiled oil at a rate of 115,000 bpd, processed 370,000 bpd at refineries, and blended 100,000 bpd of condensate in its crude streams, Bloomberg reports.
Earlier this month, the UAE's Energy Minister Suhail Al Mazrouei himself admitted that the UAE's production increased to the above-quota 2.693 million bpd in August, but that "measures have been taken to compensate for this temporary increase due to peak summer electricity demand in the UAE, which required an increase in oil production and associated gas."
Al Mazrouei also said that Abu Dhabi National Oil Company (ADNOC) had notified its term customers that a 30-percent nomination cut would be applied to all grades in October.
The UAE was already estimated last week to have exported a lot more crude oil in August as it produced more than its quota under the OPEC+ deal, undermining the oil market's faith in the group's unity in the cuts.
Unlike in previous OPEC+ pacts, non-compliance with the quotas this time requires the culprits to compensate for any above-quota production with more reductions in the following months.
Saudi Arabia, which has been publicly pressing non-compliant OPEC members Iraq and Nigeria to fall in line with their quotas, is likely to be more discreet in its pressure on the UAE, RBC Capital Markets told Bloomberg.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More
U.S. Power and NatGas Prices Plummet to Below Zero
Ukrainian Drones Hit Major Rosneft Refinery in Russia
First Niger Oil Bound for China Blocked in West Africa Border Row
Gas Prices Likely to Keep Falling Ahead of Peak Driving Season
Drone Attacks Take Khor Mor Gas Field Offline, Claims Lives