At the end of November, the Organization of the Petroleum Exporting Countries (OPEC) was unable to resolve all issues related to oil production. The question has been postponed to December. The OPEC+ meeting was postponed too.
Prices were immediately shaken by this news. They were the same in the middle of the week, but they might not. It became known that the deal was closed, so everything worked out.
Both enterprises will nevertheless establish communication and agree on all the deadlines and nuances for projects for the first quarter of the new year. But at this stage, both organizations are being updated.
What unites and what are the differences between OPEC and OPEC+?
Initially, they could not work out how to get the member countries that overproduce their quotas to compensate for this overproduction in the future. And also if OPEC + starts to overfulfill its plans in 2021.
Meanwhile, Arabia is trying to resolve this issue. Those participants who were unable to cut oil production faced pressure to commit themselves to a schedule of additional production cuts to compensate for earlier non-compliance.
This could build a bit of confidence in the organizations. Moreover, when you consider that their relationship has such an impact on price movements. Countries like Russia were not even forced to obey. You can learn more about positions, predictions and rates from trusted forex brokers 2020. This will help you make the right bet and play better.
According to Platts, the UAE wants to see stricter compensation mechanisms before agreeing to extend current production quotas even for the first three months of 2021. There is also a gap, according to Bloomberg, between Saudi Arabia, which wants to extend current production levels until March 2021 – and Russia, which aims to gradually increase production from January to March 2021.
What is being done with the UAE?
The UAE is serious about this. They even think about leaving the group. Nobody believes in this, but the fact is the fact. Others see it as fake news that has nothing to do with reality.
In addition, the UAE continued nuclear diplomacy with the US and international organizations to build its first nuclear power reactor.
A peace agreement was signed with Israel. they start working together on the economy. This is how the UAE builds a solid foundation for itself in regional issues. This is logical since the country is really powerful in terms of tourism.
As a supporter on behalf of Saudi politics in OPEC, the UAE played an influential, albeit underestimated, role in drafting the first Declaration of Cooperation with Russia and Other Countries to Form the OPEC + Group in 2016. The UAE often offers credible votes for positions given to Saudi Arabia. The relationship may still be significant, but the UAE is an independent OPEC member.
The UAE’s move can be seen as part of its political and diplomatic confidence. Instead of trying to leave, the country is using what they see as an opportunity to gain power and influence, becoming the main players in the association.
UAE Oil Minister Suhail Mazrui said that the reduction in costs of oil companies will cause a shortage of raw materials.
The main industries stated that the demand for oil was the highest. But the Emirates don’t think so. They position themselves as the oil leader.
Saudi Arabian Oil Minister Abdel Aziz bin Salman is about to step down from JMMC because he is disappointed. But this is not certain, as he could have just got angry. But many show their intentions in this direction.
Anyone who constantly monitors market behavior should consider whether it is beneficial for the Emirates when organizations cannot discuss important issues among themselves. In any case, Arabia remains the most important producer on the market. If Saudi Arabia wanted to, it could flood the market, increasing to 12 million barrels per day, as it did in April, and plans to increase production capacity to 13 million barrels per day in the near future.
However, manufacturing capacity is not everything in a cartel, which requires coalition-building to reach consensus.
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What order will the UAE be in?
They are trying to move on with high production rates, while Arabia would like to slow down. The UAE wants to go faster and sell more. In addition, thanks to their new nuclear power plants, the UAE will be able to export more oil, which they do produce.
But also the UAE economy is more diversified than some other oil producers. There is a big crisis in real estate and other areas, although finances have not suffered, tourism is doing well and trade is not stagnant.
Oil is an important component of the economy. The state does not provide much value. But the country is definitely better and stronger than Russian sales.