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Oil jumps after UAE says it is committed to OPEC+ supply pact -Breaking

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© Reuters. Pictured in Schwedt/Oder (Germany), March 8, 2022, are industrial facilities at PCK Raffinerie’s oil refinery. It receives oil from Russia through the ‘Friendship’ pipeline. REUTERS/Hannibal Hanschke

MELBOURNE (Reuters – Oil prices rose on Thursday, after the United Arab Emirates announced it would continue to support major producers’ pacts to increase supply by 400,000 barrels daily. The announcement came just hours after the UAE ambassador said that his country was ready for a greater increase.

U.S. West Texas Intermediate crude futures (WTI), jumped over $3 within minutes of opening. They were up $1.53 or 1.4% at $110.23 GMT. In the largest daily drop since November, the contract fell 12.5% during the session before that.

Suhail al-Mazrouei, UAE Energy Minister, stated late Wednesday on Twitter (NYSE – ) that the UAE is fully committed to the Organization of the Petroleum Exporting Countries agreement and other allies to gradually increase oil supplies after sharp reductions in 2020.

Al-Mazrouei stated that the UAE believed in the benefits OPEC+ brought to the oil markets.

He made these comments just hours after the price slump triggered by comments from Washington’s Ambassador to UAE that UAE will encourage OPEC increase output in order to address Russia’s sanctions. Russia called the incursion “special operations” in order to disarm Ukraine.

Saudi Arabia and UAE are able to use their spare capacities, but other OPEC+ producer countries struggle to reach their production targets. They have underinvested in infrastructure for the past few decades, which could limit their ability increase their output.

Vivek Dhar, a commodities analyst at Commonwealth Bank said that he believes it will prove difficult for OPEC+ in order to increase production in such an environment.

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