EIA: UAE Exit Trims OPEC Global Production Share by 4%


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- The United Arab Emirates' exit from the Organization 
of the Petroleum Exporting Countries will likely reduce the group's global 
crude production share from 35% down to 31%, the Energy Information 
Administration said in an analysis published Tuesday (6/23).

   This UAE'S departure also likely lowers the broader OPEC+ alliance's total 
global market share from 46% down to 42%, aligning with the output loss from 
the Gulf region's second largest oil producer, the EIA noted. The analysis 
elaborates on the agency's observations about OPEC in the EIA Short-Term Energy 
Outlook released on June 9, after the official OPEC exit on May 1.

   The EIA's observations come as the Iran war extends past the 100-day mark 
following its February 28 outbreak. During the 3-1/2 month long conflict, Saudi 
Arabia and the UAE successfully minimized internal shut-in production volumes 
compared to neighboring Middle Eastern competitors during the prolonged 
shipping crisis.

   Both countries also actively utilized major overland pipeline workarounds 
following the regional conflict and subsequent closure of the Strait of Hormuz, 
which trapped some 20 million bpd of petroleum liquids that transit the 
waterway. The UAE redirected crude barrels via the pipeline to Fujairah, while 
Saudi Arabia utilized its 7 million bpd East-West line to reach the Red Sea.

   The EIA noted that the de facto closure of the strategic waterway has 
effectively stripped OPEC of its physical ability to increase production 
levels. While regular OPEC+ ministerial meetings continue focusing on setting 
global baseline targets, actual output management remains entirely restricted 
by these localized shipping infrastructure bottlenecks, the agency pointed out.

   While both Iran and the U.S. have declared the Hormuz open again to shipping 
as they negotiate a peace deal following a 60-day ceasefire signed last week, 
the market is cautiously monitoring operational bottlenecks, unresolved 
insurance risks and the lingering threat of sea mines on the waterway.

   Notwithstanding the EIA analysis, Iran will also be adding to its output 
over the next two months after the U.S. Treasury announced Monday (6/22) a 
60-day sanctions waiver on export and global sales of Iranian oil. While Iran 
remains a founding member of OPEC, due to long-standing geopolitical friction 
and sanctions, it has been exempted from OPEC+ production targets. As such, 
under the sanctions waiver, it will be introducing new barrels to the market 
independent of OPEC.




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