OPEC signaling retreat from market share suicide pact
The United Arab Emirates threw its support on Thursday behind a plan by major oil producers to freeze output levels in an attempt to halt a slide in crude prices that has pushed them to their lowest point in more than a decade.The market share strategy has been a disaster for OPEC, and state-owned companies have shown they lack the ability to adapt to new market conditions. Venezuela was a basket case before the bottom fell out of the market, but even rich petrostates like Saudi Arabia have suffered in their attempt to squeeze shale drillers out of the market.
Russia, Saudi Arabia, Qatar and Venezuela announced their willingness to cap output at last month’s levels at a surprise meeting in Qatar this week — but only if other major oil producers join them. OPEC member Kuwait has since said it supports the proposal.
The support from the Emirates, a close Saudi ally, does not come as a major surprise but is still significant. The seven-state federation is OPEC’s third-largest oil producer.
Energy Minister Suhail Mohammed al-Mazrouei said in a statement to state news agency WAM that the Emirates supports any proposal to freeze output through consensus with OPEC and Russia, which is not part of the oil-producing bloc.
“We believe that freezing production levels by members of OPEC and Russia will have a positive impact on balancing future demand based on the current oversupply,” he said.