(Bloomberg) — French President Emmanuel Macron said that the United Arab Emirates’ ruler confided to him that OPEC’s two leading oil exporters are already pumping almost as much oil as they can.
The UAE is “at maximum” output and neighboring Saudi Arabia can promptly add only about 150,000 barrels a day, Macron said, relaying a conversation with Sheikh Mohammed bin Zayed to President Joe Biden. The remarks were caught by Reuters TV at the Group of Seven meeting in Bavaria, Germany.
UAE Energy Minister Suhail Al Mazrouei promptly sought to clarify the comments, saying that Abu Dhabi is producing close to the ceiling permitted by its agreement with OPEC+. That deal expires in the next few months.
The figures cited by Macron — which contradict official data from the two Persian Gulf energy giants — would suggest that the buffer of spare production capacity in global oil markets is nearly exhausted, complicating efforts to squeeze out Russian supply in protest over the Ukraine invasion.
Macron said that MBZ, as the UAE leader is known, “told me two things.”
“One, I am at maximum” oil output levels, amounting to the UAE’s “complete commitment” in this area, Macron said.
“Second, he told me the Saudis can increase a little bit,” about 150,000 barrels a day or “a little more,” he added. “They don’t have huge capacities” that can be activated in less than six months, he said.
Al Mazrouei said on Twitter that the UAE is “producing near to our maximum production capacity based on its current OPEC+ baseline” of 3.168 million barrels a day. The baseline — stipulated in a deal between the OPEC cartel and its allies — remains in effect until the end of the year, he said.
Biden is due to visit the Middle East next month as the president seeks to tame surging fuel prices.
Oil prices have soared more than 60% this year as crude production and refining facilities around the world fail to keep pace with the post-pandemic recovery in fuel demand, while the backlash against Russia over its invasion of Ukraine poses the biggest supply disruption in decades.
Data from the International Energy Agency in Paris suggest the two nations have much more generous levels of spare production capacity, totaling roughly 2.8 million barrels a day. Questions over their maximum capabilities nonetheless persist among traders, especially as Saudi Arabia has only sustained as much as 11 million barrels a day for a prolonged period, considerably below its advertised limit of about 12 million a day.
Oil prices briefly extended gains after Macron’s remarks were first reported, trading 1.8% higher at $109.54 a barrel in New York.
