Fuel rates flare up after the Saudi Arabia-UAE dispute in OPEC

Riyadh/Dubai – It has been reported that the dispute between Saudi Arabia and United Arab Emirates (UAE) flared up in the OPEC meeting. Because of this dispute, the meeting of OPEC and OPEC Plus members ended without coming to any firm agreement. The repercussions of this dispute in the OPEC meeting were felt in the international markets, and the crude oil rates shot up to USD 75 per barrel.

A decision had been taken by the OPEC and OPEC Plus member countries to reduce oil production during the Coronavirus pandemic crisis, given the reduced demand. But as the oil demand is returning to normal, the oil-producing countries had started moves to increase oil production. As a part of this process, a meeting of OPEC was convened last week. Discussions regarding increasing oil production were held during the session. Saudi Arabia proposed increasing oil production to 5.8 million barrels at a rate of 400,000 barrels per day. But UAE opposed the Saudi Arabian proposal to increase oil production. UAE insisted that although the output needs to be increased, UAE should get a bigger quota of the increased production. But Saudi Arabia and the other members opposed the UAE demand. There is no example of a dispute of this nature arising between Saudi Arabia and the UAE. Therefore, this dispute between the gulf allies becomes unprecedented.

The oil demand has started increasing again despite the Coronavirus pandemic. At the same time, the oil rates also have increased by nearly 40% over the last six months. Against this background, the UAE has devised a policy to extract maximum benefits from the situation by increasing oil production and export. But the intentions of the UAE have been set back due to the opposition from OPEC. At the same time, UAE claimed that although agreements have been signed in the past, countries like Russia have never abided by the terms of the contracts.

UAE has made its stand more aggressive against this background and has warned that it will not retreat under any circumstances. At the same time, Saudi Arabia has clarified that it will not change its proposal. Till date, UAE and Saudi Arabia have generally concurred in all the OPEC decisions. But the differences between the countries have come on the anvil for the first time, and analysts are claiming that this could be the beginning of a split in OPEC. Although OPEC has faced conflicts in the past, UAE and Saudi Arabia were on the same side at that time. The unity between UAE and Saudi Arabia is the main reason that OPEC is still together. It is being said that the festering dispute between the two could prove decisive for OPEC.

Meanwhile, reports show that the United States has started efforts to resolve the conflict between UAE and Saudi Arabia amicably. The dispute in OPEC has reflected in the international market, and the crude oil rates spurted to USD 75 per barrel on Wednesday. While the crude oil rates are increasing, it has also been exposed that Saudi Arabia has increased the oil rates to USD 2.70, more than the benchmark price for the Asian market.