OPEC+ much-awaited resumption of talks today has now been delayed, indicating that Saudi Arabia and the UAE have not been able to broker any agreement after the UAE opposed production cut proposals as “unfair” and the Saudis responded with tariff amendments designed to hit out as its political ally and economic rival.
Reporting on Twitter, Amena Bakr, Deputy Bureau Chief and Chief Opec Correspondent for Energy Intel, said the meeting has been postponed, with no indications of when a new date might be set.
While the UAE sees the need for higher production, it disagrees with Saudi Arabia as to how that production should be split up.
The UAE has a production capacity of some 4 million bpd; however, under the OPEC+ deal from last year, its actual output was capped at 2.59 million bpd until the end of 2020, rising to 2.74 million this year.
The UAE—OPEC’s third-largest producer--deems this as “unfair”, and has shown no indications that it is willing to budge on its demand that its baseline be changed to reflect “current production capacity”.
Last year, the UAE opposed plans by the OPEC majority, as well, sparking speculation that it would leave the cartel.
Today’s planned talks were further encumbered by the Saudi move to challenge the UAE on another front—free trade within the Gulf Cooperation Council (GCC).
In a move designed to wrangle the UAE, the Saudis have now amended rules on tariffs for imports from GCC countries to exclude goods made in free trade zones, on one hand, and to exclude Israeli input from preferential tariff concessions, Reuters reports.
The amendments will exclude goods that have any Israel origins—keeping in mind that the UAE recently normalized relations with Israel in a historic move—and any goods that contain less than 25% local labor content.
Oil prices are holding firm in light of the postponement of today’s OPEC+ meeting, and sentiment remains cautiously bullish, particularly since the failure to strike a deal means no oil output increase for the time being.