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Oil price dips as UAE endorses increased production

Global oil prices have skyrocketed due to the Russian invasion of Ukraine.
US President Joe Biden announces a ban on US imports of Russian oil and gas, March 8, 2022.

The United Arab Emirates today endorsed increasing oil production

“We favor production increases and will be encouraging OPEC to consider higher production levels,” said UAE Ambassador to the United States Yousef Al Otaiba in a statement. "The UAE has been a reliable and responsible supplier of energy to global markets for more than 50 years and believes that stability in energy markets is critical to the global economy.”

Why it matters: 

Oil prices have reached their highest levels since 2008 recently in response to the Russian invasion of Ukraine, briefly trading above $139 a barrel this week. 

However, the price of Brent crude oil, which is considered the global benchmark for oil prices, dropped today around the time of Otaiba’s remarks. The price of Brent crude fell from around $130 at the start of the day to around $111 a barrel as of 3:00 p.m. ET, according to MarketWatch

The Biden administration has been pressuring its allies in the Gulf to increase production in a bid to bring down prices. However, Saudi Arabia, Russia and other members of the so-called OPEC+ alliance declined at a meeting last week to increase production. 

The price of OPEC’s daily basket was not available at the time of publishing. The price increased slightly by $1.42 to $127.93 a barrel yesterday, according to OPEC’s data. 

Otaiba’s remarks follow a report from The Wall Street Journal yesterday that said Saudi and Emirati leaders declined calls with US President Joe Biden to discuss surging oil prices. 

US Secretary of State Antony Blinken immediately praised Otaiba’s remarks

What’s next: 

OPEC+ will meet again on March 31.

Otaiba did not specify how much oil production will increase by neither the UAE nor OPEC as a whole. 

The price of Brent crude remains well above its pre-pandemic levels. The commodity traded at around $65 a barrel in January 2020.