- Crude oil futures were higher in mid-afternoon Asian trade.
- Gulf state’s commitment to OPEC+ monthly production increases.
- The OPEC+ alliance has been increasing monthly output.
In mid-afternoon Asian trade, crude oil prices were up. The UAE’s energy minister reaffirmed the Gulf state’s commitment to OPEC+ monthly production increases on March 10, contradicting a top UAE diplomat’s appeal for increased OPEC output, causing an overnight price drop as reported by S&P Global.
OPEC+ agreement
At 4:20 pm Singapore time (0820 GMT), the May ICE Brent futures contract was up $5.20/b (4.68%) from the previous close at $116.34/b, while the April NYMEX light sweet crude contract was up $3.84/b (3.53%) to $112.54/b.
“The UAE believes in the value OPEC+ brings to the oil market,” UAE energy minister Suhail al-Mazrouei said on Twitter on March 10.
“The UAE is committed to the OPEC+ agreement and its existing monthly production adjustment mechanism.”
The comments come after the UAE ambassador to the US Yousef al-Otaiba said in a March 9 statement published on the embassy website that the Gulf producer “favours production increases and will be encouraging OPEC to consider higher production levels”.
This was followed by comments from Iraqi Oil Minister Ihsan Abdul-Jabbar Ismail who said on March 9 that he saw no shortage in the oil market and that OPEC+ will aim to make the market balanced, S&P Global Commodity Insights reported earlier.
Maintain a modest uptick
The OPEC+ alliance, which is scheduled to meet on March 31 to decide on May output levels, has been increasing monthly output by 400,000 b/d since August 2021 and agreed in a March 2 meeting to maintain the modest uptick in production quotas for April.
The UAE, along with Saudi Arabia, is the group’s only producer with more than sufficient available spare capacity to help ease prices and make up for gaps caused by new bans imposed on Russian oil imports in countries like the US and UK in response to the invasion of Ukraine, S&P Global reported earlier.
“There seems to be building expectations that diplomatic efforts will prove fruitful in unlocking supply alternatives with Saudi Arabia, UAE, Iran and Venezuela often mentioned in the discussion to cover the market shortfall,” Stephen Innes, managing partner at SPI Asset Management said in a March 10 note.
Oil imports
Secretary of State Antony Blinken, during a press conference on March 9, acknowledged that the US has “a set of interests with Venezuela” that includes “maintaining a steady supply of energy through our diplomatic efforts,” along with securing the release of unjustly detained Americans and supporting Venezuelans’ Democratic aspirations.
If sanctions are lifted, analysts said oil imports from Venezuela could substitute Russian oil.
“From 2010 to 2018, the US imported 784,000 b/d of crude oil and petroleum products from Venezuela, which was higher than the 605,000 b/d imported from Russia over the past two years,” Innes said.
Meanwhile, Russia’s Foreign Minister Sergey Lavrov and his Ukrainian counterpart Dmytro Kuleba will meet in Turkey on March 10, in what would be the first potential talks between the two officials since Russian troops invaded Ukraine on Feb. 24.
“If a perceived breakthrough in the Ukraine-Russia meeting happens this afternoon, both [oil] contracts will be back below $100/b,” Jeffrey Halley, OANDA’s senior market analyst said.
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Source: S&P Global
