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The proposed extension of oil production cuts through 2022 hasÌýescalated tensions between major producers Saudi Arabia and the UAE.

The UAE has demanded that its production quota be increased, scuppering plans from OPEC+ (the 13 OPEC members and 10 of the world's major non-OPEC oil-exporting states) to gradually increase oil output until the end of 2022. The Emirati delegationextending the current output cut would be "unfair to the UAE".Ìý

OPEC+'s meeting on 5 July was cancelled and has yet to be rescheduled, demonstrating how serious the tensions could be, although Russia is .

"This latest spat raises serious questions about the viability of OPEC+"

Interestingly, the Saudi-Emirati Coordination Council established in 2016, the GCC, and OPEC+ have thus far not endeavoured to settle the difference between OPEC's largest producer Saudi Arabia and the UAE, begging the question of their ability to mediate in times of regional tension.Ìý

Indeed, the GCC, despite housing a conflict resolution arm, has in settling differences among members in the past, and differences among members of OPEC have, over the past two years, played out quite publicly, with major implications for oil markets.

This latest spat, aside from publicly airing tensions that have arguably been over the last few years between Saudi Arabia and the UAE, raises serious questions about the viability of OPEC+, especially considering how last year's row between Russia and Saudi Arabia .Ìý

Last March, at the start of the Covid-19 pandemic, after Russia baulked at cutting production, Saudi Arabia tried to pressure the Kremlin by offering crude oil at lower prices than other members of OPEC+.

When this failed to change Russian behaviour, the Saudis announced an increase in production, that affected all oil-producing countries. Oil prices collapsed as demand crashed due to the pandemic, leading oil prices to be negative in late April 2020. Saudi Arabia had hoped that its actions would spur Russia to negotiate, but instead, it wreaked havoc on oil markets, with Saudi Arabia and Russia agreeing to production cuts in April and to their extension again in July.

OPEC's mission

Ironically, the of OPEC when it was established in 1960 included "eliminating harmful and unnecessary fluctuations" in oil prices, in addition to "safeguarding the interests of Member Countries individually and collectively".

The tensions over the past year and a half indicate the way in which the best interests of individual countries are increasingly coming to the fore and threatening the stability of oil prices, demonstrating the potential for a single state within the cartel to influence the entire global energy market.

The International Energy Agency () warns that global markets will 'tighten significantly' if + does not agree on raising supply.

— jeroen blokland (@jsblokland)

Of course, one major issue with all international organisations is the tradeoff between sovereignty and the security that comes from being part of a bloc with common interests. Saudi Arabia's decision to continue to sell cheap crude last year demonstrated its ability, as the largest producer in OPEC+, to single-handedly alter the market in a way that no other country could.

The UAE this year, however, isÌý its own power, challenging Saudi hegemony over the cartel and pursuing national interests above shared regional goals. So long as the preservation of national interests is prioritised above the interests of the broader market, it is unclear how OPEC+ can advance its foundational goals.

In such a situation, what role does OPEC+ play in regulating markets or in securing the common interests of its member states?

What happens when an international organisation falls prey to national interests?

And how can an international organisation be effective when national interests and regional rivalries come to the fore?

All of these questions will likely be answered in the coming weeks, with a prospective resolution of the Emirati-Saudi rift, but also will need to be readdressed in light of the²¹±è±è°ù´Ç²¹³¦³ó¾±²Ô²µÌý that the OPEC+ states need to prepare for.

Dr Courtney Freer is a research fellow at LSE Middle East Centre.

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