LONDON: The United Arab Emirates has fired the opening shot in what is fast becoming a fierce battle among Middle East oil producers to reclaim market share after the Iran war, a contest that threatens to weaken oil prices and further erode OPEC's authority. Gulf producers, desperate for revenue to replenish state coffers depleted during the four-month-old conflict, are under enormous pressure to sell the millions of barrels accumulated in tankers and storage facilities during the effective closure of the Strait of Hormuz. Until this space is freed, these producers cannot restart the oil and gas operations that were crippled by the conflict. The UAE has moved first. Its crude exports surged to a record 3.8 million bpd in June, according to Kpler data, after the strait was partially reopened following the memorandum of understanding between the U.S. and Iran on June 17. Much of that volume likely came from onshore and offshore storage as oilfield production recovers gradually.
The aggressive push follows Abu Dhabi's decision to quit the Organization of the Petroleum Exporting Countries in May after six decades of membership. It is now free to pursue a fully independent production strategy without OPEC constraints.
