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OPEC reached a compromise with the United Arab Emirates, agreeing to lift the amount of oil the cartel member can eventually pump as part of a wider agreement with Russia-led producers to boost global supplies, according to people familiar with the matter.

Crude prices fell immediately after news of the deal, though they quickly recovered and were little changed in early New York trading. Brent, the international benchmark, was essentially flat at about $76.50 a barrel. West Texas Intermediate was trading around $75.10 per barrel.

Earlier this month, the Organization of the Petroleum Exporting Countries agreed with a Russia-led group of producers to increase production to meet soaring demand and tame climbing prices. The group early last year cut 9.7 million barrels a day of crude, the equivalent of about 10% of demand at the time.

Demand has suddenly accelerated as many economies, particularly in the developed world, start to hum again, after wide-scale vaccination drives and moderating new caseloads in many places. The group, called OPEC+, has previously agreed to add back about 4 million barrels a day.

Early this month, most delegates agreed to a deal that would call for OPEC+ to increase production by 400,000 barrels a day each month through late 2022, which would undo the remaining curbs. But over several days of talks, the U.A.E. refused to sign on.

The country, one of OPEC’s biggest producers and usually a strong ally of the group’s de facto leader, Saudi Arabia, insisted its own quota be lifted as part of any deal.

The U.A.E. had asked for its so-called baseline—or the maximum amount of oil the group would recognize the country as being capable of producing—to be raised to 3.8 million barrels a day from 3.2 million barrels a day. In the compromise reached Wednesday with Saudi Arabia, the group agreed to increase that to 3.65 million barrels a day starting in April, according to people familiar with the matter.

The compromise is provincial and subject to the approval of OPEC+ producers when they next meet, possibly this month, according to delegates. That means any new output from the broader deal won’t hit markets immediately.

The compromise patches up for now what had turned into an acrimonious and public spat between two of OPEC’s closest traditional allies—Saudi Arabia and the U.A.E. While Saudi Arabia is far and away the bigger producer and regional power, the U.A.E. is one of just a few OPEC members with so-called spare capacity—barrels it can turn on and off quickly.

The U.A.E. has recently pushed within the group for more scope to boost its individual output quota. It has recently spent heavily to increase its output capacity. U.A.E. officials have grown to believe they need to pump that oil out of the ground faster, before demand dries up amid a broader global energy transition away from fossil fuels.

Write to Summer Said at summer.said@wsj.com and Benoit Faucon at benoit.faucon@wsj.com

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