Oil futures: Brent down 1.8% as UAE says keen to boost output

Quantum Commodity Intelligence – Oil futures fell sharply in afternoon trade London amid reports that the UAE wants to boost its production of crude amid an impasse in OPEC+ talks, a move that could threaten the overall harmony of the producer group. 

Front-month September Brent futures were trading at $73.21/barrel (1512 GMT), compared to Tuesday's settle of $74.53/b, down 1.8%.

At the same time, August WTI was trading $71.87/b, down from Tuesday's settlement of $73.37/b, or 2%. 

Brent had earlier hit a high of $75.99/b, meaning today's fall is 3.6%.

Brent is down 6% from Tuesday's peak of $77.84/b and WTI down by 6.6% from the $76.98/b six-year high Tuesday. 

The UAE wants to maximise crude revenues while demand is still healthy, a senior oil executive from the country told the Wall Street Journal Wednesday, making public the petrostate's desire for increased market share amid an OPEC+ deadlock that has seen discussions put on hold for several days.

"Market share is a key factor here," said the UAE oil executive quoted by the WSJ.

However, one market watcher told Quantum that such media briefings are common during OPEC squabbles, and that the latest UAE statements could be part of the overall brinksmanship.

Currently, the production stand-off between Saudi Arabia and the UAE shows no sign of movement, as the latter maintains its stance for a higher baseline production level of around 3.8 million bpd.

Without agreement, supply is expected to stay the same, according to earlier OPEC+ agreements.

The UAE move threatens to derail agreed cuts to OPEC+ supply that has so far wiped almost 6 million bpd off the market since Q1 last year, taking prices from below $20/b to over $78/b this month during that period.

Daniel Hynes, senior commodity strategist at ANZ said; "there are growing concerns that a lack of unity among the group would lead to less stability in the oil market. That uncertainty is only expected to rise, with no talks scheduled between OPEC+ alliance members."

Saudi oil minister Prince Abdulaziz bin Salman has reiterated that the current OPEC+ agreement remains in place, which means 5.7 million bpd will be kept off the market.

A near week-long holiday starts in the Middle East on July 19, which means a resolution would be needed before that date if the proposed August OPEC+ increase of 400,000 bpd is to be implemented.