NEW YORK/LONDON: Global oil prices fell yesterday by the most in nearly two years after Organization of the Petroleum Exporting Countries (Opec) member the United Arab Emirates (UAE) said it supported pumping more oil into a market roiled by supply disruptions due to sanctions on Russia after it invaded Ukraine.
Brent crude futures settled down US$16.84, or 13.2%, at US$111.14 (RM465.45) a barrel, their biggest one-day decline since April 21, 2020. US crude futures ended down US$15.44, or 12.5%, at US$108.70 (RM455.23), their biggest daily decline since November.
“We favour production increases and will be encouraging Opec to consider higher production levels,” ambassador Yousuf Al Otaiba said in a statement tweeted by the UAE Embassy in Washington.
Hours later, however, the UAE energy minister, Suhail al-Mazrouei, said on Twitter that it is committed to the Opec+ agreement and its existing monthly production adjustment mechanism.
“The UAE believes in the value Opec+ brings to the oil market,” he added, referring to the group and its allies.
The UAE and neighbour Saudi Arabia are among the few members of Opec with spare capacity that could increase output.
The United States has called on oil producers worldwide to increase production if they can.
Additional supply from Opec could compensate for some supply shortfalls created by disruption to Russia's oil sales by economic sanctions imposed by the US and other governments.
“That (potential output hike) is not nothing. They (UAE) can probably bring about 800,000 barrels to the market very quickly, even immediately, bringing us one-seventh of the way there in replacing Russian supply,” said Bob Yawger, director of energy futures at Mizuho.
Opec's language shifted this week when its secretary-general Mohammed Barkindo said supply is increasingly lagging behind demand.
Just a week ago, Opec+ blamed surging prices on geopolitics rather than any lack of supply and decided against increasing output any faster. – Reuters