The United Arab Emirates (UAE) is on track to exceed its oil production capacity goal earlier than expected, with the Abu Dhabi National Oil Co. (Adnoc) projected to reach a capacity of 5 million barrels per day by the end of 2025 or early 2026, surpassing its original target of 2027. This accelerated timeline, as reported by anonymous sources to Bloomberg, is set to create tensions within the Organization of Petroleum Exporting Countries and its allies (OPEC+).
Currently, Abu Dhabi is operating at around two-thirds of its capacity, but Adnoc is aggressively expanding its drilling activities and enhancing its infrastructure to maximize output. With a $150 billion investment plan in place, the company aims to expedite capacity additions to ensure that the increased production capabilities are fully utilized.
In a recent update on its website, Adnoc quietly revised its maximum crude oil production capacity figure to 4.85 million barrels per day, up from the previous 4.65 million barrels per day. This move signifies the UAE’s commitment to ramping up its oil production and tapping into its increased capacity.
Despite falling oil production in March, as reported by OPEC’s secondary sources, the UAE’s decision to accelerate its capacity addition timetable could escalate tensions within OPEC+, especially with key member Saudi Arabia. The group is scheduled to review member capacities later this year to set production baselines for 2025, adding further complexity to the situation.
The UAE, OPEC’s third-largest producer, has had previous disagreements with the group over production levels. Last summer, the UAE refused to participate in OPEC’s voluntary production cuts and has consistently advocated for higher production quotas to align with its capacity expansion efforts. In response to these demands, OPEC+ revised the UAE’s quota to 3.219 million barrels per day for 2024.
Despite potential discord within OPEC+, the UAE remains focused on leveraging its oil resources to support its economy, which, while diversified, still heavily relies on crude exports. The country’s strategic approach to maximizing its oil production capacity reflects its commitment to driving economic growth and stability.
As the UAE progresses towards achieving its oil production capacity goal ahead of schedule, the implications for OPEC+ and the global oil market remain uncertain. The upcoming meeting of OPEC+ this weekend is expected to shed light on how member countries will navigate the evolving dynamics of oil production and supply. Stay tuned for further updates on this developing story.
By Julianne Geiger for Oilprice.com