Major OPEC+ nations agreed a modest and symbolic increase in their June production quota levels, delegates said, as the group sends a business-as-usual message following the surprise exit of the United Arab Emirates.
Seven countries led by Saudi Arabia and Russia will — on paper at least — add 188,000 barrels a day next month under the agreement, which was finalized at a video conference on Sunday, the delegates said. They asked not to be identified as the decision is not yet public. The increase was expected.
OPEC+ is formally continuing the process of restoring output halted several years ago, which had been in progress before the outbreak of war. OPEC+ is adjusting to the surprise loss of long-time member the UAE, which announced its departure from the organization on April 28 after years of frustration over constraints on its output.
The UAE's move, which blindsided other members of the Organization of the Petroleum Exporting Countries and its partners, will further erode the group's ability to influence oil prices that had already been waning because of years of output hikes from rival suppliers including US shale.
Like their scheduled hike for this month, the move is largely symbolic because OPEC nations in the Middle East will be unable to implement the increase unless the Strait of Hormuz — blocked by the US-Israeli conflict with Iran — is reopened and exports from the Persian Gulf resume.
The UAE's departure, which took effect on May 1, was the culmination of years of tensions between Abu Dhabi and OPEC's de facto leader Saudi Arabia, over both oil policy and competition for regional influence. The UAE said last week that the Iran war created an opportunity for it to exit without significantly adding to market volatility.
While the departure has no immediate impact on immediate oil supply, it will mean that the UAE can ramp up supply as quickly as it chooses once the waterway reopens, unfettered by OPEC quotas, and could set the stage for future price wars.
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