Differences between the United Arab Emirates and Saudi Arabia over Gulf monetary union would have no impact on the co-ordination of oil policy between core Gulf Opec members, regional Opec sources said on Thursday. Saudi Arabia, the United Arab Emirates, Kuwait and Qatar between them pump nearly half of Opec's oil and form the most powerful group at Opec.
The four typically work towards a moderate Opec supply policy. The UAE's withdrawal on Wednesday from a scheme for a single currency marked an outcry against Riyadh's dominance in Gulf decision making, but indignation would not stretch to policy on oil - the lifeblood of the region's economy. The UAE was bridling against a decision to base a joint central bank in Saudi.
"This is just a political move and has no implications for oil," said one Gulf Opec delegate. "Don't read too much into it. There will always be lots of political back and forth on plans like this." "It won't affect oil policy at all," said another Gulf Opec delegate. The four countries are dependent on crude exports for most of their state revenues, a powerful motive for co-ordination.
"There is more cohesion on oil policy and the common goal of supporting oil prices," said Monica Malik, a regional economist at EFG-Hermes. "There was always more cohesion on this than there was on monetary union." Saudi Arabia, which exports around three times more oil than the UAE and Kuwait, has shouldered most of the 4.2 million barrels per day (bpd) of cuts that Opec has agreed since September. The Saudi share of output and cuts far outweighs those of other producers and so its actions have a bigger impact on the oil market than those of any other member.