UAE: UAE crude output stays downbeat in May; Brent prices fall

UAE Commodities May 2024

UAE: UAE crude output stays downbeat in May; Brent prices fall

Brent crude oil prices averaged USD 83.05 per barrel in May, down 6.7% from April. On 31 May, the commodity traded at USD 81.80 per barrel, down 7.0% from 30 April. Easing tensions between Iran and Israel pushed down prices.

Turning to production, in May, UAE oil output rose slightly to 2.94 mbpd (million barrels per day), from 2.93 mbpd in April, remaining at one of the lowest levels since late 2021.

After dropping last year, the UAE’s oil production is seen remaining weak this year; while OPEC+ agreed to raise the UAE’s 2024 quota by 0.20 mbpd last year, the UAE has reduced output by 0.16 mbpd since January as part of voluntary cuts that will be gradually unwound from October.

More positively, on 2 June, OPEC+ said it would allow the UAE to raise its output in 2025 by 0.3 mbpd gradually from January 2025 to September 2025, boding well for oil production in that year.

On the outlook, EIU analysts commented:

“We had been expecting a gradual unwinding of the OPEC+ cuts later in the year. The UAE has been consistently exceeding its 2.92m-b/d quota, with oil output averaging 3.2m b/d in January-April 2024. We expect that level to edge up in late 2024 and to rise more substantially in 2025 following the recent deal as the UAE’s revised quota and baseline take effect, although output will average below the new baseline overall next year. We will revise up our real GDP growth forecast to 4.5% in 2025 to reflect the sharper increase in oil output and expect the fiscal and external balances—already strongly in surplus—to benefit too.”

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