Ukraine conflict: Oil prices plunge after UAE expresses support for supply boost

Oil prices fell more than 17 per cent after a statement made by the United Arab Emirates (UAE) on Wednesday.

A highly powerful member of Opec, the UAE said it supported increasing production.

It was brent crude oil, an international benchmark, that saw the steepest decrease, following weeks of skyrocketing prices sparked by supply chain disruptions when Russia invaded and declared war on Ukraine.

Oil is used in the production of electricity, and, locally, a hedging agreement which fixed the price of oil for the past seven years is due to expire this winter. Government has said it is setting aside substantial funds to cushion the blow of the rising price of oil, and therefore electricity, with Times of Malta last year reporting that €200 million of taxpayer money has been earmarked to help keep energy prices stable.

This week, officials from the US Government had been in talks with oil producers with the aim of boosting supply and bringing down the exorbitant prices, which were having an impact on households and household spending.  

“We favour production increases and will be encouraging Opec to consider higher production levels,” Ambassador Yousuf Al Otaiba said in a statement tweeted by the UAE Embassy in Washington.

Energy prices had been soaring before the Russia-Ukraine conflict, due to pent up demand and supply chain issues, however this war saw prices soar even further, especially due to sweeping sanctions enacted against Russia.

The International Energy Agency (IEA) also recently agreed to release 60 million barrels of oil from strategic national reserves, but that move is not enough to respond to the recent run-up in prices.