OPEC + ministers have dropped oil production talks and have not set a new date to resume them, after clashes last week.
Oil prices have extended their gains to some of their highest levels since 2018 after OPEC + talks were canceled, raising expectations that supplies will tighten further as global fuel demand recedes. recovering from a COVID-19 induced crisis.
Brent crude rose 18 cents or 0.2% to $ 77.34 a barrel at 0542 GMT, after rising 1.3% on Monday. An earlier session peak of $ 77.61 was its highest level since October 29, 2018.
US West Texas Intermediate (WTI) crude futures were at $ 76.57 a barrel, up $ 1.41 or 1.9% from Friday’s close. There were no regulations on Monday, a public holiday in the United States to mark Independence Day.
It hit $ 76.77 a barrel earlier Tuesday, just below the October 2018 peak of $ 76.90.
Ministers from the Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC +, have dropped oil production talks and have set no new date to resume them, after s ‘to be faced last week when the United Arab Emirates (UAE) rejected a proposed eight-month extension of production borders.
The United Arab Emirates, the group’s fourth producer, opposed a deal proposed by Saudi Arabia and Russia to extend quota limits until the end of next year, rather than ending them in April. as originally planned.
The UAE agreed with the 22 other OPEC + members that monthly production cuts should be relaxed by 400,000 barrels per day from August, but said the extension should be dealt with separately.
The group normally resolves their differences in private and likes to show unity. But that rift is so deep that the energy ministers of the United Arab Emirates and Saudi Arabia expressed their grievances on Sunday in talks with Bloomberg Television and other outlets.
“No extra barrels”
Some OPEC + sources said there would be no increase in oil production in August, while others said a new meeting would take place in the coming days and they believed that there would be a boost in August.
“Behind the rally was the opinion that there will be no more barrels of OPEC + from next month and the recovery in fuel demand will bring further tension to the market,” said Tetsu Emori, CEO of Emori Fund Management Inc.
But he also added: “The market seems to believe in the OPEC + framework and that there will be some sort of deal by August to keep the system going.”
Iraqi Oil Minister Ihsan Abdul Jabbar said on Monday that his country is committed to the current deal with OPEC and its allies and does not want to see oil prices rise above current levels to achieve stability.
He also said he hoped that in 10 days there could be a date for the next meeting.
“Investors are unwilling to go one way or the other due to the uncertainty over the actual actions of OPEC + members starting next month,” said Toshitaka Tazawa, analyst at the commodities broker. Fujitomi Co.
OPEC + has agreed to record production cuts in 2020 to deal with a price crash induced by COVID 19.
Producers have gradually eased production restrictions, but a plan on Friday to increase production by around 2 million barrels per day (bpd) from August to December 2021 and to extend the pact over a series of gradual production shifts until the end of 2022. has been blocked.
“The sticking point is focused on the UAE’s production levels under more normal circumstances. This is an issue we expect OPEC to address before the current agreement is terminated in April 2022,” he said. Alan Gelder, vice president of Wood Mackenzie, said in a report.
“These discussions are, however, likely to prove difficult and protracted.”
Crude oil buyers in Asia were waiting for Saudi Arabia’s Official Selling Prices (OSP) to assess market direction after the unexpected cancellation of the OPEC + meeting, three refining sources told Reuters on Tuesday. Asia.