At the weekend, the group of eight Opec+ oil producers decided to continue their sped-up path towards unwinding their so called “voluntary cuts” in July by adding another 411,000 barrels per day of output.
The result: oil prices rose by about 3 per cent when markets opened on Monday. So, what led to this contradictory reaction and what does it mean for the group’s policy in the months to come?
This seemingly counterintuitive price reaction, which saw Brent trade above $65 a barrel, was partly driven by earlier market speculation that the group might opt for a more aggressive production hike. This led to a brief sell-off before the weekend. Once the expected 411,000 bpd increase was confirmed, market sentiment shifted positively. Additionally, concerns over potential supply disruptions from Canadian wildfires added upward pressure to prices.
According to delegates, the price surge was well-received within the group, particularly by members wary of further declines. However, the direction of future policy remains uncertain. Opec+ has emphasised that its August strategy will be shaped by evolving market conditions, with all options – ranging from continuing the current path to more conservative adjustments – on the table.
Opec+ policy
Given that this is the third accelerated increase by Opec+ to unwind the 2.2 million bpd voluntary cuts, there’s misconception over why the group is doing this. Common reasons cited include the need for Saudi Arabia and other Gulf states to appease US President Donald Trump and his call for $50 oil, or the shift in policy from defending prices to going after market. Both these explanations receive pushback from officials.
The driver behind the policy, which often doesn’t gain traction due to its less glamorous appeal compared to a US political dynamic, is keeping cohesion within the group. Leading members within that Opec+ eight realised that lack of compliance from Russia, Iraq and Kazakhstan to their production quotas was starting to contribute to a stock build. So, for the other members to sit on their laurels and do nothing was no longer an option. To restore a sense of fairness, an orderly plan to return the barrels gradually was needed to avoid a free-for-all situation that would drown the market in supply.
Historical precedent supports this approach. The 2020 oil price war, which started when Russia declined a proposed production cut, ultimately led to the largest cut in Opec+ history – 10 million bpd – and a renewed commitment to group co-operation.
Ensuring compliance is also essential to preserving Opec+’s market credibility, particularly if future conditions necessitate a pause or new round of cuts. This weekend’s discussions underscored this point, as Russia and Oman advocated for pausing the planned increases. However, consensus was quickly reached to proceed with the 411,000 bpd surge, which was the only formal alternative discussed.
Production outlook
At present, there appears to be limited support for pausing or deepening production cuts. However, if rising inventories or weakening demand become evident, a smaller increase or even a temporary pause could be considered. Contrary to the misconception by many traders and observers in the market, oil prices dropping to $40 or $50 a barrel is not a level that would please any of the Opec+ producers, let alone the wider industry. Therefore, this idea that the alliance supports a crash in oil prices does not hold.
Looking at the here and now of the current policy, which involves increments of 411,000 bpd for the months of May, June and July, it presents a good window for the group to reinstate output as demand during these hot summer months rises − which in turn would buffer the impact of the increase. Summer driving season in the northern hemisphere and Hajj season in Saudi Arabia are further demand pockets that would absorb the additional barrels.
Looking ahead, Moscow’s influence may play a larger role in shaping decisions. Still, for now, all members appear committed to preserving the alliance, recognising its value in maintaining market stability.
The late Opec secretary general Mohammed Barkindo once described members of Opec+ being in a “catholic marriage” – binding and enduring. Another Opec+ official once openly told me that many marriages are not perfect, but the spouses stay “because of the kids … and in Opec’s case, it’s because of the oil”.
Amena Bakr is the head of Middle East Energy & Opec+ research at Kpler, an independent global commodities trade Intelligence company
HAJJAN
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The National Archives, Abu Dhabi
Founded over 50 years ago, the National Archives collects valuable historical material relating to the UAE, and is the oldest and richest archive relating to the Arabian Gulf.
Much of the material can be viewed on line at the Arabian Gulf Digital Archive - https://www.agda.ae/en
SPECS
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What are the influencer academy modules?
- Mastery of audio-visual content creation.
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Abu Dhabi Sustainability Week
TERMINAL HIGH ALTITUDE AREA DEFENCE (THAAD)
What is THAAD?
It is considered to be the US's most superior missile defence system.
Production:
It was created in 2008.
Speed:
THAAD missiles can travel at over Mach 8, so fast that it is hypersonic.
Abilities:
THAAD is designed to take out ballistic missiles as they are on their downward trajectory towards their target, otherwise known as the "terminal phase".
Purpose:
To protect high-value strategic sites, such as airfields or population centres.
Range:
THAAD can target projectiles inside and outside the Earth's atmosphere, at an altitude of 150 kilometres above the Earth's surface.
Creators:
Lockheed Martin was originally granted the contract to develop the system in 1992. Defence company Raytheon sub-contracts to develop other major parts of the system, such as ground-based radar.
UAE and THAAD:
In 2011, the UAE became the first country outside of the US to buy two THAAD missile defence systems. It then stationed them in 2016, becoming the first Gulf country to do so.
GIANT REVIEW
Starring: Amir El-Masry, Pierce Brosnan
Director: Athale
Rating: 4/5
The Sand Castle
Director: Matty Brown
Stars: Nadine Labaki, Ziad Bakri, Zain Al Rafeea, Riman Al Rafeea
Rating: 2.5/5
Emergency
Director: Kangana Ranaut
Stars: Kangana Ranaut, Anupam Kher, Shreyas Talpade, Milind Soman, Mahima Chaudhry
Rating: 2/5
UAE currency: the story behind the money in your pockets
How the UAE gratuity payment is calculated now
Employees leaving an organisation are entitled to an end-of-service gratuity after completing at least one year of service.
The tenure is calculated on the number of days worked and does not include lengthy leave periods, such as a sabbatical. If you have worked for a company between one and five years, you are paid 21 days of pay based on your final basic salary. After five years, however, you are entitled to 30 days of pay. The total lump sum you receive is based on the duration of your employment.
1. For those who have worked between one and five years, on a basic salary of Dh10,000 (calculation based on 30 days):
a. Dh10,000 ÷ 30 = Dh333.33. Your daily wage is Dh333.33
b. Dh333.33 x 21 = Dh7,000. So 21 days salary equates to Dh7,000 in gratuity entitlement for each year of service. Multiply this figure for every year of service up to five years.
2. For those who have worked more than five years
c. 333.33 x 30 = Dh10,000. So 30 days’ salary is Dh10,000 in gratuity entitlement for each year of service.
Note: The maximum figure cannot exceed two years total salary figure.
The Lowdown
Kesari
Rating: 2.5/5 stars
Produced by: Dharma Productions, Azure Entertainment
Directed by: Anubhav Singh
Cast: Akshay Kumar, Parineeti Chopra
Benefits of first-time home buyers' scheme
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How the bonus system works
The two riders are among several riders in the UAE to receive the top payment of £10,000 under the Thank You Fund of £16 million (Dh80m), which was announced in conjunction with Deliveroo's £8 billion (Dh40bn) stock market listing earlier this year.
The £10,000 (Dh50,000) payment is made to those riders who have completed the highest number of orders in each market.
There are also riders who will receive payments of £1,000 (Dh5,000) and £500 (Dh2,500).
All riders who have worked with Deliveroo for at least one year and completed 2,000 orders will receive £200 (Dh1,000), the company said when it announced the scheme.
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What the law says
Micro-retirement is not a recognised concept or employment status under Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations (as amended) (UAE Labour Law). As such, it reflects a voluntary work-life balance practice, rather than a recognised legal employment category, according to Dilini Loku, senior associate for law firm Gateley Middle East.
“Some companies may offer formal sabbatical policies or career break programmes; however, beyond such arrangements, there is no automatic right or statutory entitlement to extended breaks,” she explains.
“Any leave taken beyond statutory entitlements, such as annual leave, is typically regarded as unpaid leave in accordance with Article 33 of the UAE Labour Law. While employees may legally take unpaid leave, such requests are subject to the employer’s discretion and require approval.”
If an employee resigns to pursue micro-retirement, the employment contract is terminated, and the employer is under no legal obligation to rehire the employee in the future unless specific contractual agreements are in place (such as return-to-work arrangements), which are generally uncommon, Ms Loku adds.
Springsteen: Deliver Me from Nowhere
Director: Scott Cooper
Starring: Jeremy Allen White, Odessa Young, Jeremy Strong
Rating: 4/5
THE DETAILS
Kaala
Dir: Pa. Ranjith
Starring: Rajinikanth, Huma Qureshi, Easwari Rao, Nana Patekar
Rating: 1.5/5
Russia's Muslim Heartlands
Dominic Rubin, Oxford
