Oil price rise over by 1%, Gulf producers are near full production capacity

The energy minister for the United Arab Emirates said the country was producing very close, contradicting expectations that this could help boost strong market access. As a result, oil prices rose about 1% in early Asian trading on Tuesday.

According to some estimates, Saudi Arabia and the United Arab Emirates are the only OPEC members with the additional ability to compensate for lost Russian goods and limited operations. A seam of tight supply news bolstered the market. Two major producers, Saudi Arabia and UAE, are said to be at, or very close, near-term capacity limits” said Commonwealth Bank analyst Tobin Gorey. The futures price of Brent LCOc1 oil increased by $ 1.08, or 0.9 per cent, to $ 116.17 a barrel, following the previous session by 1.7 per cent.

With an average of 3.168 million barrels per day (bpd) under an agreement with OPEC and its partners, known as OPEC +, UAE energy minister Suhail al-Mazrouei said on Monday the country was producing almost or close to its full potential.

His statements echo the words of French President Emmanuel Macron, who told US President Joe Biden outside the Seventh General Assembly that Saudi Arabia could increase production by 150,000 BPD, under its backup capacity of 2 million BPD, and that the UAE operates at a high volume.

Analysts also point out that political unrest in Libya and Ecuador could significantly delay service delivery.

According to Ecuador’s Ministry of Energy, as a result of anti-government protests, the country could completely halt oil production in the next two days. Prior to the protests, the former OPEC country produced about 520,000 barrels a day. These factors highlight the market deficit, which has caused market stagnation this week and resisted price pressures related to the recession two weeks ago.

“More barrels must come to markets for oil prices to move meaningfully and steadily lower,” SPI Asset Management managing partner Stephen Innes said in a note.