Abu Dhabi National Oil Companyis preserving its spare capacity cushion even as crude prices head higher.
The government-owned petroleum group, which pumps about 95 per cent of the UAE's oil, yesterday told customers to expect June crude shipments about 5 per cent smaller than contracted amounts.
As with a string of similar monthly announcements since the end of 2008, Abu Dhabi National Oil Company (Adnoc) said the cuts were "in accordance with [the] Opec decision to reduce production".
The oil exporters' group cut its output target by a record 4.2 million barrels per day (bpd) in a series of decisions in late 2008, while oil prices were falling sharply. It has not announced an official quota change since then.
Nevertheless, a number of Opec members have pumped above their presumed quotas in recent months as global oil demand strengthened. That has given oil traders concerns that spare capacity might have shrunk to the point that Opec cannot easily compensate for a further disruption to supplies, after the curtailment of about 1 million bpd of premium-quality Libyan crude exports because of armed conflict in that country.
Adnoc's announcement yesterday that June shipments of all four of its export crude grades will be 5 per cent below the contracted amounts suggests Abu Dhabi is keeping its oil exports flat compared with recent months at about 2.3 million bpd, while keeping an estimated 500,000 bpd of spare production capacity in reserve.
Last month, Adnoc said it would provide full contracted volumes of three of its export crudes, while shipments of Murban crude, the most prolific and popular Abu Dhabi export grade, would be cut by 10 per cent.
Uncertainty over spare capacity is one of the factors that market-watchers believe has pushed up crude prices by about 30 per cent this year.
Last week, the Saudi oil minister Ali al Naimi surprised analysts by saying Saudi Arabia cut its output to 8.3 million bpd last month from 9.1 million bpd in Februarybecause of a lack of demand for more of its crude. The announcement highlighted a problem that has recently exacerbated oil price volatility: a lack of reliable data on Opec production and spare capacity.
"There is a difference of 500,000 to 700,000 bpd between the highest and lowest" estimates of Opec output, said Mohammed Ali Khatibi, the Opec governor for Iran.