UAE Set to Surpass Oil Production Capacity Goal Sooner Than Expected
Accelerated Capacity Expansion Prompts Friction within Global Oil Alliance
UAE Set to Surpass Oil Production Capacity Goal Sooner Than Expected
The United Arab Emirates is poised to achieve its oil production capacity target earlier than projected, with the Abu Dhabi National Oil Co. (Adnoc) anticipated to reach a capacity of 5 million barrels per day by the end of 2025 or early 2026, surpassing its initial goal of 2027. Insider sources disclosed this information to Bloomberg, indicating an accelerated timeline for capacity expansion.
This expedited trajectory is forecasted to stir tensions within the Organization of Petroleum Exporting Countries and its allies (OPEC+). The consortium is slated to reassess member capacities later this year to establish production benchmarks for 2025.
Currently, Abu Dhabi operates at approximately two-thirds of its capacity. However, the state-owned Adnoc is aggressively ramping up drilling operations and fortifying its infrastructure to optimize output. With a hefty $150 billion investment plan, the company aims to fast-track capacity enhancements, ensuring that augmented production capabilities do not languish underutilized.
Earlier this month, Adnoc quietly revised its maximum crude oil production capacity figure on its official website, without formal announcement. The updated capacity stands at 4.85 million barrels per day, up from the previous 4.65 million barrels per day.
Despite this proactive stance, the UAE witnessed a decline in oil production in March, as reported by OPEC’s secondary sources. The OPEC+ alliance faces challenges in aligning production with agreed-upon levels. Accelerating the capacity addition timeline could exacerbate tensions within OPEC+, particularly with Saudi Arabia, ahead of the upcoming group meeting scheduled for this weekend.
As OPEC’s third-largest producer, the UAE has historically grappled with the consortium, eager to augment oil production and harness expanded capacity. Last summer, the UAE abstained from OPEC’s voluntary production cuts, advocating for increased pumping to align with capacity expansion. This stance led to revisions in the UAE’s quota, elevated to 3.219 million barrels per day for 2024 by OPEC+ in June.
Despite potential discord, the UAE remains steadfast in leveraging its oil resources to bolster its economy. Despite diversification efforts, the nation still heavily relies on crude exports for economic sustenance.
