Stark choice must be faced to end Saudi-Emirati stalemate
Contrary to media reports, the UAE is not about to leave OPEC and, despite a public stand-off with Saudi Arabia, compromise and agreement will be reached.
The recent doom and gloom between UAE and Saudi Arabia appears to be lifting as both sides soften – there is nothing more sobering than demand destruction looming on the horizon – but unless the hardwired distance between Riyadh and Abu Dhabi is bridged, further OPEC+ negotiations could be derailed and a period of uncapped price volatility ushered in.
This is the second time the UAE has made clear its displeasure with the rudiments of the April 2020 production agreement – the first time was following the November OPEC meeting – and it is hard to imagine either Emiratis or Saudis backing down from their fundamental positions at the next OPEC Joint Ministerial Monitoring Committee (JMMC) and set of ministerial meetings.
Unless its core grievances are alleviated and the country’s strong sense of injustice addressed, Abu Dhabi is facing a stark choice – either serve its immediate national interest and walk away from OPEC or succumb to Saudi Arabia’s leadership and lose face. The UAE leadership is unlikely to take the second option and will fight hard behind the scenes to secure a new baseline, which it deems fairer.
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