Seven members of the OPEC+ oil coalition plan to raise their daily oil production targets starting in June. According to sources familiar with the matter who spoke to Reuters on Saturday, the group wants to pump an additional 188,000 barrels of oil per day. The coalition plans to continue this steady increase despite the sudden and shocking departure of the United Arab Emirates earlier this week.
This planned production bump closely matches the actions the group took last month. In May, the coalition raised its total production target by exactly 206,000 barrels per day. The new target of 188,000 barrels simply adjusts that previous math to remove the share originally promised by the UAE. This decision sends a clear message to the global energy markets that the remaining OPEC+ members intend to stick to a business-as-usual approach moving forward.
The energy ministers from these 7 countries will gather online this Sunday to finalize the specifics of the production increase. During this virtual meeting, they will likely discuss the shifting dynamics of the global oil market and how to handle the massive gap left behind by one of their biggest partners.
The UAE dropped a massive bombshell on the energy sector this past Tuesday. The wealthy nation officially announced it will quit the OPEC organization entirely on May 1. This marks the end of a nearly 60-year membership in the organization for the Middle Eastern country. By walking away from the group, Abu Dhabi frees itself from the strict output limits that OPEC uses to balance global supply and demand.
Financial markets and energy traders reacted with total shock to the news last week. The UAE was the fourth-largest oil producer in OPEC. Experts rarely see a country with that much drilling power simply walk away from the negotiating table. The move immediately sparked fears about the future stability of global oil prices.
Several OPEC delegates admitted last week that this departure will definitely weaken the group’s tight grip on the global oil markets. Without the UAE’s massive production capacity, the cartel loses significant leverage over international fuel prices. However, the delegates also stressed that the remaining members expect to stay united and will continue coordinating their strict supply policies to protect their own economies.
Before the recent output curbs linked to the ongoing US-Israeli war on Iran, Abu Dhabi pumped a massive amount of oil. The nation produced roughly 3.4 million barrels of crude oil every single day. To put that massive number into perspective, it accounts for roughly 3 percent of the entire global crude oil supply. This incredible daily volume makes the UAE the largest oil producer ever to leave OPEC.
Now, the global market waits to see what the UAE will do with its newfound freedom. Without strict OPEC quotas holding them back, Abu Dhabi could easily ramp up production and flood the market with cheap oil to steal customers away from its former partners. The remaining OPEC+ members must carefully balance their own June production hikes to ensure they do not accidentally crash the price of a single barrel while they adjust to this new, highly competitive reality.
