(Bloomberg) -- The United Arab Emirates, a key member of OPEC+, will reduce oil shipments early next year as the alliance seeks stronger discipline in meeting production targets to shore up prices.
Abu Dhabi National Oil Co., known Adnoc, has cut the allocation of crude oil cargoes for some customers in Asia, according to companies with contracts to receive the shipments. Volumes were reduced by as much as 230,000 barrels a day across a range of crude grades, they said, asking not to be identified as the transactions are private.
Oil traders have been closely scrutinizing flows from the UAE in recent months, as Abu Dhabi and its partners in the Organization of Petroleum Exporting Countries attempt to defend faltering prices. Brent futures have lost 16% since early July to trade near $74 a barrel.
While data compiled by the cartel shows the UAE mostly abiding by its output quota of 2.912 million barrels a day, some traders have been skeptical. Estimates from International Energy Agency in Paris suggest production may have been significantly higher.
Adnoc didn’t respond to a request for comment.
Abu Dhabi has been eager to deploy recent additions in production capacity, boosting revenues and monetizing billions in investments. Adnoc says it can pump as much as 4.85 million barrels per day, almost 2 million barrels above its OPEC+ limit.
The UAE’s determination to make use of its capabilities has led to clashes with group leader Saudi Arabia in recent years, threatening to shatter the entire OPEC+ coalition, though a compromise has been found each time.
OPEC+’s leadership has pressured several members for failing to implement their share of production cutbacks agreed at the start of the year, mostly notably Iraq, Kazakhstan and Russia.
The trio have repeatedly pledged to comply better. Yet while they’ve shown considerable progress in recent months, they’re yet to really begin additional cutbacks promised as compensation for their initial overproduction.
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Last week, OPEC+ agreed once again to delay a planned restart of halted production as faltering demand in China and swelling output from the Americas threatens to unleash a new global glut. The group now plans to begin a series of modest 120,000 barrel-a-day hikes from April.
As a gesture of commitment to the coalition’s goals, Abu Dhabi agreed to postpone an extra 300,000 barrel-a-day ramp-up it had been accorded in recognition of its expanded capabilities.
Rather than pumping 2.912 million barrels a day as stipulated, the Paris-based IEA estimates that UAE production is around 3.25 million per day. Tanker-tracking by Bloomberg indicates that the country’s oil exports alone may be as much as 3.86 million barrels a day, suggesting that production could be higher still.
The export curbs planned by Adnoc will affect cargoes for loading in January and February, and primarily impact the Murban and Upper Zakum crude grades, according to people involved in the transactions.
--With assistance from Grant Smith and Alex Longley.
