The UAE's oil GDP will return to growth in 2022 after contracting in 2021 thanks to an uptick in global demand sparked by vaccination rates in major economies, the central bank said in its latest quarterly economic report, amid an increase in oil prices and OPEC+ production despite the spread of the omicron variant of the coronavirus.
Not registered?
Receive daily email alerts, subscriber notes & personalize your experience.
Register NowOil GDP will grow by 5% in 2022 after shrinking by 2% in 2021, the central bank said in the report. Overall GDP is projected to double to 4.2% in 2022, thanks mainly to the growth in the oil sector, it added.
"Real oil GDP growth projection for 2022 has not been changed and remains at 5.0%, reflecting the expected increase in demand with the majority of the world economies being vaccinated," the central bank said. "Both, non-oil and oil GDP projections for 2022 are subject to upside risks if global economies, trade and travel reach the full recovery point faster than expected, while downside risks are related to uncertainties around new variants [of the coronavirus] and vaccination rates globally."
OPEC+ pact
The UAE, OPEC's third biggest producer, increased its output gradually in 2021 in line with the OPEC+ relaxation of oil output curbs that were initiated in 2020 at the start of the pandemic. The UAE's oil GDP shrank 6% in 2020 as the pandemic reduced global demand for crude.
OPEC+ agreed on Jan. 4 to increase its output by a planned 400,000 b/d in February, in accordance with a July agreement to boost production monthly.
In affirming a 400,000 b/d output increase for February, the OPEC + alliance signaled continued confidence that the omicron variant will have a smaller impact on global oil demand than previously assumed, and crude prices have so far proved resilient, hovering around $80/b. S&P Global Platts assessed Dated Brent at $78.99/b after the meeting.
OPEC+, which meets monthly, will convene next on Feb. 2 to decide on March production levels.