Oil prices barreled down by 12% Wednesday after the United Arab Emirates called on its OPEC partners to ramp up production.
The UAE’s ambassador to the United States said the Middle Eastern country would support “higher production levels” to help ease markets ravaged by elevated prices and anxiety over future oil scarcity as the West imposes economic sanctions on Russia for its war in Ukraine.
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“We favor production increases and will be encouraging OPEC to consider higher production levels,” said Yousef al Otaiba, the envoy, according to the Financial Times. “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.”
Brent crude oil, which is an international benchmark for oil prices, began Wednesday around $130 a barrel and plunged to about $112. The Dow Jones Industrial Average soared by about 650 points — a 2% increase from Tuesday.
Secretary of State Antony Blinken said support for boosting production “is an important thing to stabilize global energy markets,” according to Bloomberg, which also reported that the UAE did not consult with its OPEC partners prior to the ambassador’s comments.
It remains unclear if OPEC will actually bolster production — some member countries, such as Iraq, have voiced concerns about doing so. The biggest unknown is Saudi Arabia, the de facto leader of OPEC. So far, the country has been mum on calls to boost oil production.
President Joe Biden has reportedly been lobbying oil-rich countries such as the UAE to bolster production as the United States prepares to ban the import of Russian oil and gas. Roughly 3% of U.S. crude oil imports come from Russia, per the American Fuel and Petrochemical Manufacturers trade association. The European Union relies on Russia for about 45% of its gas.
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Both the UAE and Saudi Arabia reportedly declined calls from Biden as he appeals for increased oil output. Some political analysts, such as CNN’s Fareed Zakaria, have suggested that the U.S. could combat rising oil prices by lifting sanctions on oil-rich Venezuela and Iran — the prospect of which has been met with bipartisan wariness.
