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Brent oil fell sharply as UAE officials said there was no plan to leave the Organization of Petroleum Exporting Countries.
The global benchmark had retreated by as much as 2.8%, though some of those losses were later pared back to nearly $84 a barrel. The officials were responding to a Wall Street Journal report that a growing rift with Saudi Arabia meant it was having internal discussions about leaving the alliance.
The UAE has said publicly and privately that it will abide by the current OPEC output deal for at least this year. If the UAE were to leave the grouping, it would risk a political blowout not only with Saudi Arabia, one of its largest trading partners, but also with other Gulf allies such as Kuwait and Iraq.
UAE officials have been considering for several years which alliances best suit the country’s long-term interests as the country tries to cash in on the recent expansion of its manufacturing capacity. In an earlier OPEC+ dispute with Saudi Arabia, the group’s policy decision was delayed for weeks, but a compromise was eventually found.
The spate of headlines triggered a rare period of oil price volatility on Friday, with crude falling sharply by about $2 before finally recovering to trade where futures were before the first report.
Last month, UAE Energy Minister Suhail Al Mazrouei said in an interview with Bloomberg TV that he is not concerned about his country’s current production quotas agreed with the OPEC+ alliance. production for 2024. Days earlier, delegates said Russia’s partners in the OPEC+ coalition will not increase production to accommodate the cuts announced by Moscow.
For much of this year, oil prices have struggled to break out of the $10 range, with traders weighing a period of interest rate hikes by the Federal Reserve against expectations of higher crude oil consumption following a reopening of the Chinese economy. economy. Traders largely expected OPEC production to remain stable for the remainder of this year.
–With assistance from Immanual John Milton.
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