© Reuters. Industrial facilities of PCK Raffinerie oil refinery are pictured in Schwedt/Oder, Germany, March 8, 2022. The company receives crude oil from Russia via the ‘Friendship’ pipeline. REUTERS/Hannibal Hanschke
MELBOURNE (Reuters) – Oil prices rebounded on Thursday after the United Arab Emirates said it is committed to major producers’ pact to add 400,000 barrels per day of supply monthly, hours after UAE’s ambassador to Washington said his country favoured a bigger increase.
U.S. West Texas Intermediate (WTI) crude futures jumped more than $3 shortly after opening and were trading up $1.53, or 1.4%, at $110.23 at 2324 GMT. The contract had tumbled 12.5% in the previous session in the biggest daily decline since November.
UAE Energy Minister Suhail al-Mazrouei said on Twitter (NYSE:) late on Wednesday his country is committed to the agreement by the Organization of the Petroleum Exporting Countries and allies, together called OPEC+, to ramp up oil supply gradually following sharp cuts in 2020.
“The UAE believes in the value OPEC+ brings to the oil market,” al-Mazrouei said.
His comments came just hours after prices slumped on comments by UAE’s ambassador to Washington that his country will be encouraging OPEC to consider higher output to fill the supply gap due to sanctions on Russia after it invaded Ukraine. Russia calls its incursion a “special operation” to disarm its neighbour.
While UAE and Saudi Arabia have spare capacity, some other OPEC+ producers are struggling to meet their output targets due to underinvestment in infrastructure over the past few years, which will limit their ability to lift output further.
“We think it will be challenging for OPEC+ to boost production in this environment,” Commonwealth Bank commodities analyst Vivek Dhar said.
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