Saudi Arabia's Energy Minister has condemned the opposition of the United Arab Emirates to a proposed OPEC+ deal to increase output and extend cuts, in a clear example of the growing rift between the two Gulf States.
The Organisation of the Petroleum Exporting Countries and its allies (OPEC+) voted to raise the output and production of oil by two million barrels per day from August to December this year while extending the remaining cuts to the end of 2022. The aim of the deal, following the effects of the Covid-19 pandemic, was to contribute to global recovery by serving consumer demands for more crude oil.
The UAE opposed the deal yesterday, however, saying that while the output of oil should be increased, the extension of the supply should be postponed and deferred to another meeting while a review of the baseline production references is conducted.
The kingdom's Energy Minister, Prince Abdulaziz Bin Salman, hit back in an interview with the Saudi-owned Al Arabiya channel yesterday.
"The extension is the basis and not a secondary issue," he explained. "You have to balance addressing the current market situation with maintaining the ability to react to future developments… If everyone wants to raise production then there has to be an extension."
The prince called on "compromise and rationality" from the UAE. "Big efforts were made over the past 14 months that provided fantastic results and it would be a shame not to maintain those achievements."
Throughout the pandemic and following the oil price war between Saudi Arabia and Russia early last year, the global market has been in disarray and the demand for oil has plunged. OPEC+ member states, therefore, agreed to cut their output by 10 million barrels per day from May last year, with plans to phase that plan out by the end of April 2022.
The dispute between Riyadh and Abu Dhabi is seen by many as the widening of a rift between the two which has developed over the past few years. Its roots lie in the UAE's decision to decrease its role in the ongoing war in Yemen in which it fought in the Saudi-led coalition.
It also follows years of speculation that Saudi Arabia aims to become a leading economic and business leader in the region. This could challenge the UAE's position as the regional business hub. The Emirati opposition to the OPEC+ deal could be Abu Dhabi's way of flexing its muscles against Riyadh.
Following the UAE opposition, Saudi Arabia yesterday banned travel to and from the Emirates – as well as Ethiopia and Vietnam – while claiming that it was due to the ongoing pandemic. Observers have suggested, however, that it is part of the growing rift between Riyadh and Abu Dhabi.