Supported by a number of…
Based on a number of…
The United Arab Emirates (UAE), currently OPEC’s third-largest producer, increased its oil production in August to above its quota as per the OPEC+ deal as electricity demand soared in the summer, Reuters reported on Tuesday, quoting two sources with knowledge of the matter.
Crude oil production in the UAE averaged 2.693 million barrels per day (bpd) in August, according to Reuters’ sources. This is some 100,000 bpd above the country’s production ceiling under the OPEC+ pact—2.59 million bpd.
According to OPEC’s secondary sources in its latest report with data for July, the UAE—OPEC’s third-biggest producer behind Saudi Arabia and Iraq—produced 2.43 million bpd of oil in July, up by 98,000 bpd from June, when the UAE, Saudi Arabia, and Kuwait had collectively cut an additional 1 million bpd for one month to support oil prices amid weak global demand.
The key reason for the increased production in the UAE in August was the high electricity demand in the hottest months in the Middle East, which this year was further boosted by more people staying and vacationing at home because of COVID-19-related travel restrictions.
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.
According to Reuters’ sources, the UAE will cut more supply and exports in the coming months to compensate for the lack of compliance last month.
Reports emerged earlier this week that Abu Dhabi National Oil Company (ADNOC), the company pumping nearly all the oil in the UAE, has told its customers that it would reduce its oil supplies by 30 percent in October. For September, ADNOC had signaled to customers that its oil supply would be 5 percent lower than usual, Reuters reported.
According to a recent internal OPEC+ report seen by Reuters, between May and July, the UAE produced on average 52,000 bpd above its quota.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.