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UAE Ramps Up Oil Production Capacity Ahead of OPEC Meeting

UAE Ramps Up Oil Production Capacity Ahead of OPEC Meeting

May 2, 2024

UAE Ramps Up Oil Production Capacity Ahead of OPEC Meeting

The Abu Dhabi National Oil Company (ADNOC) has increased its oil production capacity to 4.85 million barrels per day (bpd), positioning itself strategically ahead of the upcoming OPEC meeting. This development is part of the United Arab Emirates (UAE) state-owned oil company's long-term goal to expand its production capacity to 5 million bpd by 2027.

While ADNOC updated its production figures on its website, it refrained from making an official announcement on the increase from its previously stated capacity of 4.65 million bpd in 2023. The company also maintains a natural gas production capacity of 11.5 billion cubic feet per day. The timing of this capacity increase is noteworthy, as the UAE’s oil production actually declined in March, according to OPEC’s secondary sources.

The UAE, as OPEC’s third-largest producer, has had a history of tension within the group. Last summer, the UAE announced it would not participate in OPEC's voluntary production cuts. In June last year, after extended negotiations, OPEC+ agreed to revise the UAE’s production quota upwards to 3.219 million bpd for 2024, reflecting the UAE's increased production capacity.

Currently, OPEC's production cuts are set to continue until the end of June. The next OPEC+ meeting, scheduled for June 1, will be crucial in determining whether these cuts will be extended or if the group will begin to unwind them.

Adding to the conversation, OPEC’s Secretary General Haitham Al Ghais cautioned against underestimating the longevity of oil demand in the face of electric vehicle (EV) mandates and the "green transition." He emphasized that overconfidence in a rapid demand decline could lead to policies that might create an imbalance in the oil market, potentially causing a supply deficit and higher prices.

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