Saudi Arabia, UAE pledge to ‘significantly increase’ oil production

• OPEC leaders Saudi Arabia and the United Arab Emirates have agreed to “dramatically increase” oil production if needed.
• Countries have pledged to pump more oil specifically if the world faces a supply shortage this winter.
• Saudi Arabia, the United Arab Emirates and other OPEC countries have up to 2.7 million bpd of spare capacity.

OPEC leaders Saudi Arabia and the United Arab Emirates have pledged to provide a “significant increase” in oil production if the world faces a supply crunch this winter, Reuters has been told. Reuters sources familiar with the matter.

The two countries could supply “much more”, sources added, but only if the supply crisis worsens in the coming months.

“With possibly no gas in Europe this winter, with Russian oil sales potentially price capping over New Year, we can’t throw every barrel on the market right now,” a source told The Point. sale.

In July, sources told the Wall Street Journal that Saudi Arabia was close to maximizing its oil production capacity, as it is already close to its limit. The issues stem from maintenance requirements, production slowdowns in some fields and pressure level issues.

But the recent announcement turns those issues on their head after sources told Reuters that Saudi Arabia, the United Arab Emirates and other OPEC members hold up to 2.7 million barrels per day of capacity. unused production.

“The only time we can prove we have more spare capacity is when it’s a long-lasting crisis,” the sources said.

Saudi Arabia is OPEC’s top producer, with about 10.6 million barrels per day of production in July, according to the group’s data, while the United Arab Emirates is third after Iraq, with a production of approximately 3.1 million barrels per day.

A global energy crisis triggered by the war between Russia and Ukraine, which subsequently cut supplies, has left countries worried about their winter supply. Europe in particular has feared that Russia could completely cut gas supplies to the region in response to Western sanctions.

Germany is specifically suffering the effects of the energy crisis, forcing leaders to draw up contingency plans to save gas before the colder months hit.

In response to a tight oil market, OPEC+ announced at its last meeting that it would increase daily production by 100,000 barrels per day in September, pushing oil prices above $100.45 per day. barrel Wednesday.

At the time of writing, benchmark Brent crude futures were down 1.4% at $95.38 a barrel, while West Texas Intermediate crude was down 1%, below $90 a barrel for the first time since late February.