The Opec+ agreement, concluded last April, has been a remarkable success in dragging oil prices out of the worst demand crisis. But it was always clear that the route back to normality would pose different challenges from the emergency measures. Monday’s meeting of the group was postponed as co-chairs Saudi Arabia and Russia took more time to consider the UAE’s proposed amendments to the baseline that production levels are set to. There is also disagreement over the long-term path forward as demand recovers amid the Covid-19 pandemic.
The deal has not failed, as some headlines say. The production cuts agreed in April, and gradually relaxed since then, remain in place. The members also concur that the market needs more oil, and had aligned on an increase of 400,000 barrels per day each month. Oil prices have risen almost linearly from under $40 per barrel in November to $77 on Tuesday, showing that demand has recovered strongly, and that, if anything, the proposed Opec+ increase was on the low end.
The sticking point relates to the end of the deal, currently set to expire next April. The group had been voting on a proposal to extend the co-operation until the end of next year, continuing with the regular monthly production increases. The UAE feels it is unnecessary to decide on such a prolongation now.
It maintains that any extension would also require baselines to be reconsidered, giving it higher permitted output. Based on April 2020, the last time members were producing without constraint, the UAE’s baseline is 18 per cent below maximum. Instead of its baseline of 3.168 million bpd, it is seeking 3.841 million bpd.
Saudi Arabia’s 11 million bpd is only 5 per cent below the April 2020 level; Russia, also set at 11 million bpd, is 5 per cent above April 2020. Several other adherents of the pact, such as Angola, Azerbaijan and Algeria, have recorded production declines and likely could not return to early 2020 output, even if they were allowed. I predicted in September that the passage of time, bringing increasing misalignment of production quotas with national capacities, meant problems by 2022.
Oil prices jumped on the news of the meeting’s postponement, with Brent crude rising above $77 a barrel, the market focusing on the lack of an immediate production increase. Agreement would need to be reached soon for the purpose of planning August’s output.
But the deal is finely balanced. If countries do not see a clear path forward, while prices are strong, the very high compliance achieved to date will weaken. Iraq has been the least-compliant and remains in desperate need of revenue. Russia has also tested the boundaries of the agreement. Production cuts could crumble slowly, or suddenly evaporate if Riyadh grows tired of subsidising others’ overproduction.
As Prussian General Carl von Clausewitz said, “The best strategy is always to be very strong, first generally, then at the decisive point”. The UAE’s position is strong, generally because its financial situation allows it to tolerate lower oil prices, and at the decisive point because it holds large and growing spare capacity. It is the only Opec+ member with substantial growth in output capability over the past two years and credible plans to go further.
Sanctions on Iran, a lack of investment in Kuwait and shambles in Venezuela have made the UAE decisively Opec’s third-largest producer, not far behind Iraq.
This is entirely in line with the plans of Adnoc, the UAE’s main oil-producing company, to reach 5 million bpd production capacity by 2030. Similar to the situation in Iraq, a host of international partners who have joined its fields since 2014 want to see a return on their investment, not continuing deep production curbs.
US shale has slumbered since the pandemic, as shareholders demand cost discipline and cash returns. But a lengthy period above $80 a barrel will again awaken the Kraken, a lesson Opec could have learnt in 2009 or 2016. Russia is well aware of this threat.
And with the prospect of a decline in long-term oil demand as electric vehicles and other technology advance, it makes no sense for the major low-cost producers to limit their output severely while others gain market share.
How will this situation be resolved? There could be agreement to defer consideration of the deal extension and baselines until later in the year, when the market situation may look different. This could risk volatility as the deadline grows closer.
Immediate production increases could go ahead while the Opec+ committees take their time to reassess the baselines, but this is inherently a political rather than technical decision. Changing quotas brings winners and losers and is always hard for Opec to achieve, unless market realities have become inescapable or a period of breakdown allows for a reset. It would be wise to find some flexibility or exiting the deal elegantly will prove much harder than it was entering into it.
Robin Mills is chief executive of Qamar Energy and author of The Myth of the Oil Crisis
How has net migration to UK changed?
The figure was broadly flat immediately before the Covid-19 pandemic, standing at 216,000 in the year to June 2018 and 224,000 in the year to June 2019.
It then dropped to an estimated 111,000 in the year to June 2020 when restrictions introduced during the pandemic limited travel and movement.
The total rose to 254,000 in the year to June 2021, followed by steep jumps to 634,000 in the year to June 2022 and 906,000 in the year to June 2023.
The latest available figure of 728,000 for the 12 months to June 2024 suggests levels are starting to decrease.
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
MATCH INFO
England 19 (Try: Tuilagi; Cons: Farrell; Pens: Ford (4)
New Zealand 7 (Try: Savea; Con: Mo'unga)
'Saand Ki Aankh'
Produced by: Reliance Entertainment with Chalk and Cheese Films
Director: Tushar Hiranandani
Cast: Taapsee Pannu, Bhumi Pednekar, Prakash Jha, Vineet Singh
Rating: 3.5/5 stars
Our legal consultant
Name: Dr Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
SPECS
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MATCH INFO
Fixture: Ukraine v Portugal, Monday, 10.45pm (UAE)
TV: BeIN Sports
The%20specs
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Lexus LX700h specs
Engine: 3.4-litre twin-turbo V6 plus supplementary electric motor
Power: 464hp at 5,200rpm
Torque: 790Nm from 2,000-3,600rpm
Transmission: 10-speed auto
Fuel consumption: 11.7L/100km
On sale: Now
Price: From Dh590,000
if you go
The flights
Etihad and Emirates fly direct to Kolkata from Dh1,504 and Dh1,450 return including taxes, respectively. The flight takes four hours 30 minutes outbound and 5 hours 30 minute returning.
The trains
Numerous trains link Kolkata and Murshidabad but the daily early morning Hazarduari Express (3’ 52”) is the fastest and most convenient; this service also stops in Plassey. The return train departs Murshidabad late afternoon. Though just about feasible as a day trip, staying overnight is recommended.
The hotels
Mursidabad’s hotels are less than modest but Berhampore, 11km south, offers more accommodation and facilities (and the Hazarduari Express also pauses here). Try Hotel The Fame, with an array of rooms from doubles at Rs1,596/Dh90 to a ‘grand presidential suite’ at Rs7,854/Dh443.
VEZEETA PROFILE
Date started: 2012
Founder: Amir Barsoum
Based: Dubai, UAE
Sector: HealthTech / MedTech
Size: 300 employees
Funding: $22.6 million (as of September 2018)
Investors: Technology Development Fund, Silicon Badia, Beco Capital, Vostok New Ventures, Endeavour Catalyst, Crescent Enterprises’ CE-Ventures, Saudi Technology Ventures and IFC
UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
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
Avatar%20(2009)
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The specs
- Engine: 3.9-litre twin-turbo V8
- Power: 640hp
- Torque: 760nm
- On sale: 2026
- Price: Not announced yet
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Our legal advisor
Ahmad El Sayed is Senior Associate at Charles Russell Speechlys, a law firm headquartered in London with offices in the UK, Europe, the Middle East and Hong Kong.
Experience: Commercial litigator who has assisted clients with overseas judgments before UAE courts. His specialties are cases related to banking, real estate, shareholder disputes, company liquidations and criminal matters as well as employment related litigation.
Education: Sagesse University, Beirut, Lebanon, in 2005.
The specs
The specs: 2019 Audi Q8
Price, base: Dh315,000
Engine: 3.0-litre turbocharged V6
Gearbox: Eight-speed automatic
Power: 340hp @ 3,500rpm
Torque: 500Nm @ 2,250rpm
Fuel economy, combined: 6.7L / 100km
How to help
Send “thenational” to the following numbers or call the hotline on: 0502955999
2289 – Dh10
2252 – Dh 50
6025 – Dh20
6027 – Dh 100
6026 – Dh 200
The Farewell
Director: Lulu Wang
Stars: Awkwafina, Zhao Shuzhen, Diana Lin, Tzi Ma
Four stars
Honeymoonish
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MATCH INFO
Newcastle United 2 (Willems 25', Shelvey 88')
Manchester City 2 (Sterling 22', De Bruyne 82')
Dhadak 2
Director: Shazia Iqbal
Starring: Siddhant Chaturvedi, Triptii Dimri
Rating: 1/5
Naga
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Gran Gala del Calcio 2019 winners
Best Player: Cristiano Ronaldo (Juventus)
Best Coach: Gian Piero Gasperini (Atalanta)
Best Referee: Gianluca Rocchi
Best Goal: Fabio Quagliarella (Sampdoria vs Napoli)
Best Team: Atalanta
Best XI: Samir Handanovic (Inter); Aleksandar Kolarov (Roma), Giorgio Chiellini (Juventus), Kalidou Koulibaly (Napoli), Joao Cancelo (Juventus*); Miralem Pjanic (Juventus), Josip Ilicic (Atalanta), Nicolo Barella (Cagliari*); Fabio Quagliarella (Sampdoria), Cristiano Ronaldo (Juventus), Duvan Zapata (Atalanta)
Serie B Best Young Player: Sandro Tonali (Brescia)
Best Women’s Goal: Thaisa (Milan vs Juventus)
Best Women’s Player: Manuela Giugliano (Milan)
Best Women’s XI: Laura Giuliani (Milan); Alia Guagni (Fiorentina), Sara Gama (Juventus), Cecilia Salvai (Juventus), Elisa Bartoli (Roma); Aurora Galli (Juventus), Manuela Giugliano (Roma), Valentina Cernoia (Juventus); Valentina Giacinti (Milan), Ilaria Mauro (Fiorentina), Barbara Bonansea (Juventus)
