UAE Oil Policy: National Development and Global Prosperity

  • 2 September 2010

The message of the UAE to petroleum producers and consumers all over the world recently came through a statement by the President, His Highness Sheikh Khalifa bin Zayed Al Nahyan (God bless him), which he delivered at the third summit of OPEC. It was a conference where leaders of the organization entered into negotiations to address the critical issues facing the oil cartel in the past few months.

The President, God bless him, stated that the UAE (which produces approximately 3 million barrels of oil per day) will keep on cooperating with OPEC on oil supply to the global market to sustain human development. At the same time, His Highness drew attention to some of the factors responsible for the present increase in oil prices, such as rise in global energy consumption, imposition of taxes by oil-consuming countries that in some countries has increased by 100% and speculation in oil markets.

The position of the UAE at the OPEC summit, which ended in Riyadh on November 18, 2007, is in keeping with the UAE’s oil policy. It confirms the necessity to profit from the oil wealth at local and foreign levels and the role of the country in activating rules for joint action, within the framework of its OPEC membership, in order to achieve stability in oil markets. His Highness said there is a need to ensure requisite supplies in order to promote world economic growth and to preserve the interests of producers and consumers.

The statement of the President, His Highness Sheikh Khalifa bin Zayed Al Nahyan, on the “commitment of the UAE to secure more investment in order to increase production” and his reiteration on the “realization of security of demand against supplies security” comes from the stable position of the UAE within this framework. Oil-producing countries are bearing high cost in developing their productivity, particularly in the context of the drop in the value of the dollar, which has raised the expenditure into development of oil refineries into billions of dollars, in addition to the impossibility of ensuring the permanence of oil prices at equitable levels.

It is to be mentioned here that OPEC and the IAEA expects a fall in the global demand for oil in the coming period. OPEC lowered its expectations of demand on crude oil prices in the last quarter of 2007 to 100 thousand barrels per day. In addition, the IEA lowered its expectations on rising demands in a report issued simultaneously with the OPEC report. The IEA document confirms the logical demand of ensuring stability in demand levels, which would encourage oil-producing countries to take bold steps and prevent them from making extreme changes to their economies, which could hamper their growth plans.