Oil markets have this past week been dominated by discussions of baselines. Specifically, by the UAE’s distaste for the baseline from which its Opec+ quota was set in April 2020. The root cause of the UAE’s dissatisfaction is that having invested billions of dollars in expanding its production capacity, its production quota is set in line with what it regards as obsolete production figures which unfairly constrain its output.

The UAE position is that having invested heavily in boosting its production capacity, any extension to the agreement beyond next April should reflect these capacity changes. UAE Energy Minister Suhail al-Mazrouei told CNBC that “the UAE sacrificed the most” through the current agreement by “making one third of our production [capacity] idle.” The government sees it as untenable that this should persist beyond April 2022, and wants a higher baseline from May 2022 as a result. (CONTINUED - 1022 WORDS)