Dr. Florence Eid-Oakden shares her views with S&P Global Platts Oilgram News on how political disputes could influence cooperation on production cuts in the region:
The sultanate, which produces a relatively modest 1 million b/d, has adhered scrupulously to the OPEC deal, despite the effect on its relatively weak economy. S&P Global Ratings said this month that Oman had suffered a “sharp slowdown in economic growth” as a direct result of cutting oil output by some 30,000 b/d compared with last year’s levels, and downgraded the country’s rating.
While Rumhi insisted this week the deal was good for Oman, the country is partly limiting its production to stay on the right side of Saudi Arabia, said Florence Eid-Oakden, chief economist at Arabia Monitor. However, it is a commitment that allows Oman to stick to a fundamental principle of “neutrality” in foreign policy.
“Oman charts a neutral path, but not by ignoring the wishes of others,” Eid-Oakden said.
By contrast, the wealthier UAE shows little signs of fulfilling its production commitment, cutting barely half the amount it signed up for so far this year, according to the International Energy Agency.
Saudi Arabia had effectively given the UAE a pass, partly because of the latter’s support for Saudi military intervention in Yemen, Eid- Oakden said.
But relations between ruling families also remain important. While the UAE’s Mazrouei initially doubted a production cut deal would be effective, between the Saudi and Abu Dhabi royal families, there was “more convergence” on the desirability of a deal, Eid-Oakden said.
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