UAE: Outlook for UAE oil output darkens in December, but official figures called into question
Latest reading: Brent crude oil prices averaged USD 73.51 per barrel in November, down 2.3% from October. On 29 November, the commodity traded at USD 73.20 per barrel, unchanged from 31 October. Prices lost ground on cooling tensions in the Middle East and the rising prospect of OPEC+ output hikes.
Turning to production, in November, UAE oil output was largely unchanged at 2.96 mbpd (million barrels per day) from October’s 2.95, remaining at one of the lowest levels since late 2021.
Outlook: The UAE’s oil output is set to largely stagnate in 2024 compared to 2023, with a 0.20 mbpd increase in the country’s OPEC+ quota broadly offsetting a 0.16 mbpd voluntary cut since January. In 2025, the UAE’s oil output should improve, boosted by a 0.30 mbpd increase in its quota as well as OPEC+ as a whole loosening production quotas in the year.
That said, the outlook has dimmed in recent weeks: In early December, OPEC+ pushed out the loosening of production quotas from January to April, and in mid-December, the UAE agreed with OPEC+ to delay the planned 0.30 mbpd increase in its quota from January to April, and to phase it in over 18 months instead of nine as originally planned. This comes amid International Energy Agency estimates suggesting that OPEC’s oil-production data is underestimating the true level that the UAE is producing, with the country actually significantly exceeding its agreed quota level. Risks to UAE oil output are tilted to the downside, with the potential for OPEC+ quota loosening to be delayed to mid-2025.