Abu Dhabi National Oil Company (Adnoc) has the ability to increase oil production by several hundred thousands of oil per day to alleviate any potential supply shortages, the company said on Tuesday as Saudi Arabia and Russia too reaffirmed an agreement between Opec and its allies to increase production to about one million barrels per day to stabilise oil prices.
The company emphasised that working in close cooperation with the UAE Ministry of Energy and Industry, it stands ready to increase its production in alignment and coordination with Opec (Organisation of the Petroleum Exporting Countries) and the Opec and non-Opec Joint Ministerial Monitoring Committee.
Adnoc currently has an oil production capacity of around 3.3 million barrels per day and is expected to increase its production capacity to 3.5 million bpd by the end of 2018, a statement on WAM said.3.3m
Adnoc’s current output capacity
Opec and non-Opec members, such as Russia, agreed to increase production at a meeting in Vienna last month but did not provide a specific number on how much production hike they are targeting in the coming months. Saudi oil minister Khalid Al Falih said that the increase should be close to one million barrels per day.
The development comes as oil prices rise due to geopolitical tensions and tightening of global oil markets, with global oil benchmark Brent going up from less than $50 per barrel two years ago to about $79 per barrel currently.
World’s top oil consuming countries like US, India and China have expressed concern over the rise in oil prices, with US President Donald Trump even asking Saudi Arabia to raise production by two million barrels per day to stabilise oil prices.
Brent was trading at $78.28 per barrel on Tuesday at 5:10pm UAE times, up by 1.27 per cent. US crude West Texas Intermediate was at $74.81 per barrel.2m
Current level of supply outages
“The intention to raise production should calm the market under normal circumstances. These are, however, not normal times as supply outages, actual as well as perceived, could be well over 2 million barrels per day from Libya, Venezuela, Angola and potentially Iran,” Tamas Varga, an oil analyst from London based PVM Oil Associates Ltd told Gulf News.
“Those with spare capacity, and they are the Gulf producers, would not be able to fill the gap if worst comes to worst. Hopefully it will not happen but the market is certainly pricing in this possibility.”
Meanwhile, Iranian President Hassan Rouhani issued a stern warning over Middle East’s supplies saying if its crude oil exports were threatened, the rest of the Middle East’s was as well.
“It seems they do not understand what they are saying when they say Iran will not be allowed to export even a single of drop of oil. All right, if you can do such a thing, do it and see the result,” Associated Press quoted Rouhani as saying while addressing Iranian expatriates in Switzerland on Monday night.
Iran has previously threatened to close the Strait of Hormuz, a narrow waterway carrying a fifth of the world’s traded oil, over sanctions on its controversial nuclear enrichment programme.
Iran, the third-biggest producer of oil within Opec, also recently called on the group to prevent some members from increasing their output without seeking consensus with other members.
Opec and non-Opec members agreed to increase production at a meeting in Vienna last month. The increase should be close to one million bpd.
Source: Gulf News