The growing spat between Saudi Arabia and the UAE looks set to continue following a decision by OPEC+ to call off a meeting yesterday over an increase in oil production. OPEC+, an amalgamation of the Organisation of the Petroleum Exporting Countries and ten other oil-exporting nations such as Russia and Kazakhstan, was due to reconvene yesterday after failing to reach a deal at the end of last week following complaints by the UAE that its production capacity has been underestimated thus limiting the amount of oil it can produce under the current agreement.
With talks reaching an impasse, Mohammed Barkindo, secretary-general of OPEC said to oil ministers that the meeting had been "called off" and that "the date of the next meeting will be decided in due course."
One person familiar with Saudi Arabia's policy, cited in the Financial Times, said the UAE's stance put a deal out of reach, and prices would probably rise as a result. He appeared to direct his frustration at Abu Dhabi. "We missed a good opportunity to help the market relieve a temporary shortage," Barkindo said. "They [UAE] need to now take the heat of higher oil prices."
Another person familiar with the Saudi and Russian position said: "There is no postponement, the UAE blocked the decision, so the meeting is cancelled. The current production levels continue as they are."
Saudi Arabia and Russia are said to be keen to see oil production increase gradually but want the current deal which limits output to continue beyond its scheduled April 2022 termination date. The deal was initially agreed upon by the oil-producing countries due to a global slump in demand for oil following the outbreak of the coronavirus pandemic.
The UAE is opposed to any idea of extension because it says that it has invested billions of dollars to increase its production capacity and insists that its baseline was set too low when OPEC+ originally forged the deal. Abu Dhabi's argument is that any extension must consider its growth in capacity otherwise it would be left short-changed.
However, a solution to the UAE's complaint about its baseline is said to be complicated and any workaround may adversely impact some of the bigger oil-producing countries.
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The cancellation of the meeting is the latest example of the stand-off between Saudi Arabia and the UAE. The two countries developed a strong alliance over the past few years notably in combating the regional threat from Iran and pushing back against pro-democracy forces following the 2011 popular Arab uprising.
Cracks however began to appear in 2019 when the UAE withdrew most of its military forces from Yemen, leaving Saudi Arabia alone in its battle against Iran-backed Houthis. Other major sources of tension are said to be the speed of Saudi-led effort to end the trade and travel embargo on Qatar which Abu Dhabi is not pleased with while Riyadh is equally frustrated with its smaller Gulf neighbour over the pace of its normalisation with Israel. Saudi Crown Prince Mohamed Bin Salman is also spearheading a campaign to lure multinationals to relocate from Dubai to Riyadh in an ambitious plan that has put a further strain on their relationship.