Power demand pushes UAE August oil output above OPEC+ quota
- The output exceeds the country's quota under the OPEC+ supply pact by about 100,000 bpd.
- The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, a group known as OPEC+.
DUBAI: The United Arab Emirates pumped 2.693 million barrels of oil per day in August, above its OPEC+ quota, after hot weather and people holidaying at home drove associated gas demand for power generation, two sources familiar with the matter told Reuters.
The output exceeds the country's quota under the OPEC+ supply pact by about 100,000 bpd, the sources said on Tuesday on condition of anonymity. The pact allows the UAE to produce 2.590 million bpd.
The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, a group known as OPEC+, are seeking to cut production by 7.7 million bpd between August and December.
The UAE will compensate for the August rise by reducing its oil supply and exports in the coming months, the sources said.
UAE Energy Minister Suhail al-Mazrouei confirmed the August rise in output in a tweet later on Tuesday. He said that "measures have been taken to compensate for this temporary increase due to peak summer electricity demand" and reiterated the UAE's commitment to the OPEC+ pact.
OPEC+ countries that breach their targets are under pressure from other members of the group, including de-facto OPEC leader Saudi Arabia, to reduce production by the end of September to offset any oversupply since the cuts were agreed.
The August increase in the UAE's crude production stemmed from higher power demand during the hot summer months, the sources said. It was boosted this year as people stayed at home because of COVID-19 fears and travel restrictions.
Curbs on crude output also reduce production of associated gas, a byproduct used to power air conditioners and as feedstock for the petrochemicals industry.
UAE spot crude exports have risen since July because of destocking from tanks filled during an April production surge and lower domestic refinery runs, consultancy Energy Aspects said in a report last week.
The consultancy also said that the UAE originally planned to raise its October output to 0.9 million bpd above its quota.
Abu Dhabi National Oil Company (ADNOC), the UAE's main oil producer, told customers it would cut its October crude term supplies by 30% for all crude grades, Mazrouei said.
An internal OPEC+ report found that the UAE, which made additional voluntary cuts in June, overproduced by about 50,000 bpd between May and July.
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