Oil prices were searching for direction on Thursday morning in London after plummeting overnight on the back of a statement from the United Arab Emirates in favour of increasing production.
The UAE said it will encourage the Opec oil producers cartel to “consider higher production levels”.
Having topped US$130 a barrel for most of the week, Brent crude futures plunged to US$110 yesterday evening after the statement, the biggest single-day decline in almost a year.
“We favour production increases and will be encouraging Opec to consider higher production levels,” said Yousef al-Otaiba, the UAE’s ambassador to Washington, in a statement to media that was also shared on Twitter.
“The UAE has been a reliable and responsible supplier of energy to global markets for more than 50 years and believes that stability in energy markets is critical to the global economy.”
The UAE is a close ally of Saudi Arabia, the driving force of Opec, analysts noted.
Market analyst Marshall Gittler at BDSwiss said: “The UAE seems to be alone in this position so far though. It’s not obvious that it will result in anything more than another argument between the UAE and Saudi Arabia.”
A barrel of Brent was up 6% at just over US$117 on Thursday morning.