DUBAI – The United Arab of Emirates and Saudi Arabia announced on Wednesday further increases of oil production putting more pressure on Russia.
The move came in the midst of a crude price war as a result of the coronavirus outbreak.
Saudi Arabia’s oil giant Aramco said it would boost its maximum oil production capacity from 12 to 13 million barrels per day (bpd).
The Saudi announcement came only a day after the state-owned company said it would increase production by 2.5 percent in April to reach 12.3 million bpd.
Following in the footsteps of Aramco, UAE state-owned Abu Dhabi National Oil Company (ADNOC) announced it would increase its supply to more than four million barrels per day in April, following the collapse in the OPEC+ deal.
“We are disappointed that no agreement was reached by OPEC+ and the current declaration of cooperation will therefore expire at the end of March 2020,” UAE Minister of Energy Suhail al-Mazroui tweeted.
As oil prices slid and stock markets collapsed on Monday due to the COVID-19 outbreak, Riyadh sought out cuts in OPEC+ production but Moscow opposed the stance.
Russia has criticized the Saudi move and said it is “probably not the best option.”
“Saudi Arabia has announced it has dropped prices (…) It has announced a production increase. We believe this is, perhaps, not the best option in the current conditions,” Russian Minister of Energy Alexander Novak told reporters.
The disagreement also extended to how the matter should be addressed.
While Novak said the Russians have been in contact with ministers inside and outside OPEC, al Mazroui posted on Twitter:
“OPEC and OPEC+ played an important role in delivering market stability. The UAE Ministry of Energy and Industry firmly believes that a new agreement is essential to support a balanced and less volatile market.”
ADNOC Group CEO Sultan Ahmed al-Jaber said in a statement issued by the company:
“In line with our production capacity growth strategy announced by the Supreme Petroleum Council, we are in a position to supply the market with over 4 million bpd in April. In addition, we will accelerate our planned 5 million bpd capacity target.”
He also added that ADNOC will shortly announce “forward prices for the months of March and April 2020. This decision has been made to ensure that our customers have visibility of the price so they can plan accordingly.”
Saudi Arabia and Russia formed an alliance to halt price declines in 2016.
The oil pricing war between Saudi Arabia and Russia is the latest in a series of tensions that took the region by storm including Syria and Libya.
The ongoing tussle sent crude oil crashing by 25 percent on Monday, the sharpest decline seen since the 1991 Gulf War. Prices are now $35/b.