Global oil prices fell but then bounced back on Friday after reports on tensions between the United Arab Emirates and Saudi Arabia in the Organization of the Petroleum Exporting Countries (OPEC).
What happened: The Wall Street Journal reported Friday that the two Gulf allies are in disagreement about oil production. The UAE wants to pump more oil to boost its revenues, but Saudi Arabia has said no. The UAE was reported to be considering leaving OPEC as a result.
The report also noted increasing disagreements between the UAE and Saudi Arabia on the war in Yemen, specifically regarding the Emirates’ plan to build a military base in the country.
The price of Brent crude oil fell from more than $84 a barrel to below $83 a barrel on the back of the report, according to market data. Brent crude oil is widely considered the global benchmark for global oil prices.
However, Bloomberg subsequently reported that the UAE denied it is considering leaving OPEC, citing anonymous officials. Brent crude oil subsequently rebounded and traded at around $85.75 a barrel around 1 pm ET on Friday.
The Emirati government has not officially commented on the matter.
Why it matters: The Wall Street Journal report shed light on potential tensions in the OPEC alliance. OPEC, Russia and other oil producers in the so-called OPEC+ alliance have appeared to be in agreement on oil production since the COVID-19 pandemic and the Saudi-Russian price war tanked oil prices in 2020. Since then, the alliance has consistently made oil decisions together.
Last month, OPEC+ agreed to keep oil production unchanged following a big production cut in November.
The UAE and Saudi Arabia have appeared to be in agreement on energy matters in recent months. At a conference in Abu Dhabi last October Saudi and Emirati officials warned against underinvestment in oil and gas in the face of increasing interest in renewable energy.
Know more: Saudi Arabia and Yemen have disagreed on the war in Yemen before. The UAE is a nominal ally of the Saudi-led coalition supporting the Yemeni government, but Abu Dhabi supports the secessionist Southern Transitional Council in the country. In 2020, the council and the Yemeni government reached a power-sharing deal.