US embassy cable - 04ABUDHABI652

C O N F I D E N T I A L ABU DHABI 000652 
 
SIPDIS 
 
DEPT FOR NEA/RA, NEA/ARP, INR/EC, EB/CBA, S/CT, 
EB/ESC/IEC/EPC FOR MCMANUS 
USDOE FOR INT'L AFFAIRS -- COBURN, CALIENDO, AND HUTTO 
USDOC FOR 1000/OC/ 
USDOC FOR 4520/ITA/IEP/ONE 
USDOC FOR 4530/ITA/MAC/ONE/DGUGLIELMI 
4500/ITA/MAC/DAS/WILLIAMSON 
3131/CS/OIO/ANESA 
NSA FOR RICK KARP 
 
E.O. 12958: DECL 03/09/09 
TAGS: EPET, PGOV, BEXP, ENRG, ECON, EINV, TC 
SUBJECT: UAE OIL MINISTER: "OPEC MAY REVIEW PRODUCTION 
CUTS AT ITS MARCH 31 MEETING" 
 
1.  (U) Classified by Deputy Chief of Mission Richard 
A. Albright, for reasons 1.5 (B) and (D). 
 
2.  (U) UAE Oil Minister Obaid Al-Nasseri told 
reporters last week that OPEC would stand by the April 
1 production cuts, but review its policy at the OPEC 
meeting at the end of March.  Indeed, the UAE already 
has notified its major customers under term contract 
that it will reduce the volume of crude available in 
April in line with the OPEC mandate.  The cuts also 
coincide with planned maintenance work on the crude 
production facilities at Das Island, which produces 
the Umm Shaif and Lower Zakum crudes. 
 
3.  (C) In a March 8 meeting with Econoff, the chief 
adviser to the UAE Oil Minister, Dr. Ibrahim Ismail, 
said that "something would have to be done" during the 
March 31 OPEC meeting if oil prices remained high 
during the next two weeks.  He believes that OPEC 
should delay the April 1 production cuts until later 
this year to allow oil prices to return to the $22-$28 
range, "but there are many oil ministers against 
revising the existing plan." 
 
4.  (C) Dr. Ibrahim said that some OPEC delegates 
argue that the market is balanced, and OPEC's 
projections show overall crude supply for the year 
will exceed demand by more than 1.5 million barrels 
per day.  Others claim that the decreased value of the 
dollar (by about 30 percent vis- vis the Euro) means 
that the real price of crude oil remains within the 
$22-$28 OPEC price band.  Still others blame the USG 
for driving up oil prices by increasing the stocks of 
the Strategic Petroleum Reserve by 7 percent during 
the last year.  Dr. Ibrahim said he can only speculate 
as to the position OPEC states will take on March 31; 
he reminded Econoff that the September meeting proved 
that OPEC Oil Ministers still "had the guts" to 
surprise everyone. 
 
5.  (U) Coincidentally, the UAEG released figures 
March 8 that its windfall from high oil prices in 2003 
caused GDP to reach a record $74.3 billion last year - 
- the most prosperous economic and fiscal year since 
the UAE's founding in 1971.  Official figures showed 
the UAE's real GDP grew 4.7 percent in 2003. 
 
Wahba