In a significant development at the June 2nd OPEC+ ministerial meeting, the United Arab Emirates (UAE), OPEC’s fourth-largest producer, successfully negotiated a higher production quota.
This agreement allows the country to increase its oil production by an additional 300,000 barrels per day (bpd), phased in over the first nine months of 2025. Notably, this stands in contrast to other OPEC+ members, who agreed to extend existing production cuts totaling around 3.7 million bpd for another year.
ADNOC’s Expanding Capacity and the UAE’s Spare Production Power
The UAE’s national oil company, Abu Dhabi National Oil Company (ADNOC), recently ramped up its production capacity to 4.85 million bpd, with ambitions to reach 5 million bpd by 2027. The new quota of 3.519 million bpd still leaves ADNOC with a substantial spare production capacity of over 1.3 million bpd. Furthermore, other Emirati oil companies, such as Sharjah National Oil Co. and Emirates National Oil Co., contribute additional barrels to the total output.
Despite this production increase, the UAE will maintain 30% of its capacity offline, a reduction from the current 40%. Notably, the UAE’s spare production capacity relative to total output significantly surpasses other OPEC members. Even Saudi Arabia, OPEC’s largest producer, only keeps 25% of its total production in reserve.
Fueling Energy Expansion Plans and Maintaining OPEC+ Unity
The increased production quota aligns with the UAE’s ambitious energy sector expansion plans, particularly its goal of achieving gas self-sufficiency by 2030. As most of the gas produced in the UAE is associated gas, the OPEC+ oil production quota previously limited its production. ADNOC Gas, a subsidiary of ADNOC, plans to invest over $13 billion in various gas projects over the next five years.
The UAE’s higher quota also serves as a strategic move to maintain unity within OPEC+ and avoid repeating the divisions seen in previous summits. This agreement allows the UAE to pursue its expansion plans while remaining within the organization.
OPEC+ Production Increase Amidst Export Decline
Interestingly, the OPEC+ production increase coincides with a significant drop in the UAE’s crude oil exports by sea in May. Average daily export volumes fell to 2.694 million bpd, a 22% decrease compared to April’s 3.433 million bpd. Upper Zakum crude oil exports also experienced a 9% month-on-month decline. However, Murban exports reached a record high of 1.666 million bpd in April and only slightly decreased to 1.369 million bpd in May.