Uganda sides with Saudi Arabia in US-OPEC row 

OPEC is made up of 13 oil-producing countries, which include Saudi Arabia, Libya, the United Arab Emirates (UAE), Venezuela, Nigeria, Algeria, Angola, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, and the Republic of the Congo. 

The 13 countries, as of 2018, accounted for 44 percent of the global oil production and 73 percent of the world’s “proven” oil reserves hence OPEC’s enormous influence on global oil prices that were previously determined by American multinational oil companies.

A loose group, OPEC+ which includes Russia was formed in 2016 with other top non-OPEC oil-exporting nations to exert more control over the price of crude oil. OPEC+ controls more than 50 percent of global oil supplies and about 90 percent of proven oil reserves. 

On October 5, the OPEC+ countries announced plans to impose deep output cuts, starting next month, a move they said is intended to shore up prices of crude oil that fell from $120 (Shs 456,883) per barrel in June to $83 (Shs 316,011) as of last evening. The decision was premised on heightened fears about the prospect of a global economic recession occasioned by the lingering Russo-Ukrainian war and the impacts of the Covid-19 pandemic.

The US which has been pushing OPEC+ countries to keep pumping more crude oil since 2020, warned Saudi Arabia, a key ally in the restive Middle East region and the architect of the decision to scale back oil production, of “consequences.” Both the White House and US Congress expressly condemned the move.

Mr Henry Oryem Okello, the State minister for International Relations told this publication yesterday: “Uganda should be able to take decisions that protect and promote its interests. We similarly think in the Saudi Arabia case, where Saudi is under a lot of pressure on crude oil production, it has a right to make independent decisions.”

He added: “It is not only Saudi Arabia which is under pressure; this is OPEC. So the pressure should not only be on Saudi but other countries too, but more importantly, Saudi has a right to make its own decisions on matters that promote their own interests. If they feel that there should not be an increase but rather a reduction that should be respected.”

As a cartel, the OPEC+ member countries mutually agree on how much oil to produce, which in effect has a bearing on supply of crude oil in the global market at any given time. With a winter coming and amid soaring inflation, the scaling back of the supply of crude was interpreted in Washington as backstabbing by Riyadh, a key ally.

The decision was reached at the OPEC+ headquarters in Vienna Austria by the Saudi Energy minister, Abdulaziz bin Salman, a half-brother of the Saudi Crown Prince Mohammed bin Salman, flanked by Russian deputy prime minister Alexander Novak, just days after Washington had slapped sanctions on him.

The formation of OPEC in 1960 was heralded as a turning point in the oil industry towards national sovereignty over natural resources and the cartel’s decisions have since been critical both in the oil market and international markets.

Uganda, which is nursing ambitions to start commercial oil production by 2025 following the recent announcement of the Final Investment Decision, expressed in 2017, ambitions to join the exclusive club to tap into benefits like stabilisation of crude oil prices.

Mr Oryem said OPEC’s decision to scale back output is a result of the Russo-Ukrainian conflict for which “Uganda already opted for neutrality.”

“We cannot take sides in the conflict we do not understand well. It is our position and we have communicated it to all our development partners.”

Washington gives Uganda nearly $1 billion dollars each year mainly for health and security support. 

Asked whether Kampala’s latest stance won’t jolt the Biden administration, after voting in March to “abstain” on a motion to reprimand Russia for attacking Ukraine, Mr Oryem said: “Uganda is an independent country whose decisions must be respected.”

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