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OPEC+ To Meet As Cartel Inches Toward Resolving Saudi-UAE Dispute
- By The Financial District
- Jul 18, 2021
- 2 min read
OPEC and its allies will meet on Sunday, July 18, 2021, the latest sign that a bitter standoff between Saudi Arabia and the United Arab Emirates has been resolved, Javier Blas, Salma El Wardany and Grant Smith reported for Bloomberg News.
Oil ministers will meet at noon Vienna time, the group confirmed. Officials have said privately in recent days that a full meeting would only be called if a deal was in reach. A truce would open the way to more oil coming onto the market, easing a looming supply squeeze and averting an inflationary price spike.
It would also put an end to a diplomatic spat that has unnerved oil traders, as the fight between the two long-time allies risked unraveling the broader OPEC+ accord that’s underpinning the recovery in crude prices.
The UAE has been arguing that the way its quota is calculated is unfair. To make its point, the country blocked a deal that the rest of the cartel had agreed to, which would have added 400,000 barrels a day each month. The collapse of talks briefly sent crude to a six-year high in New York, although prices have dropped since to trade just below $72 a barrel on Friday.
Earlier this week, there were signs of progress between Saudi Arabia and the UAE toward an outline agreement that would have given the UAE a more generous output quota.
Then on Saturday, ministers from Saudi Arabia, Kuwait, the UAE, Bahrain and Oman met online to discuss the matter, delegates said, asking not to be named because the information isn’t public. The spat has been unusually public as tensions between the two countries go beyond oil diplomacy amid growing economic rivalry.
As the ministers of each country used media interviews to make their case, memories were stirred of the 2020 price war, and Abu Dhabi’s veiled threat later that year to leave the alliance.
“Over the past year it has become increasingly clear that a necessary if not sufficient condition for OPEC+ cohesion is alignment between not only Russia and Saudi Arabia, but also the UAE,” said Bob McNally, president of Rapidan Energy and a former White House official, predicting a deal would be done. “Odds favor success.”
