Russia and the other producers known as the Opec+ group will increase Opec+ production by 500,000 barrels per day in January, but the small size of the output rise is seen as helping to keep a floor under oil prices in the weeks ahead. Oil prices are expected to remain steady moving into 2021, but uncertainly still hangs over a longer-term outlook for oil demand that depends on a global anti-coronavirus vaccination campaign. Key Middle Eastern producers are likely to remain cautious about major expansion and greenfield oil projects until demand recovers handsomely. Saudi Arabia, which has supported curtailing oil supplies in support of higher oil prices, could further delay billions of dollars’ worth of offshore capacity enhancement projects, as the coronavirus outbreak continues to cripple oil demand in key regions worldwide.
UAE, on the other hand, has been frustrated with the steep cuts in oil production since the spring Opec+ agreement, which has left almost half of its oil production capacity idle. Unlike Saudi Arabia, UAE wants to increase its oil production, and it has expressed its discontent within the Opec group on many occasions. Abu Dhabi, the oil-rich emirate within the UAE, has ambitious plans to ramp up its oil production capacity to 5 million bpd by 2030, which requires billions of dollars’ worth of investments. Project watchers have cautioned that Abu Dhabi would continue to delay large-scale, oil-expansion projects including the long-term development plans of its Upper Zakum and Lower Zakum and the Belbazem project, until there’s more clarity on its production ramp-up plans. In the past few years, Abu Dhabi has aggressively expanded its oil-production concessions agreements, and awarded multiple oil and gas exploration deals, aimed at expanding its oil-production capacity. The emirate also fears that by restricting its production capacity drastically, it could risk some of its key oil assets, which could get stranded, if they are not developed in the coming years.