After failing last week to agree on crude oil output levels, the 23 members of the OPEC+ group of producers called off a meeting planned on Monday to overcome the impasse, a source close to the alliance told AFP.
No new date was given for them to reconvene.
Since May, the group has raised oil output little by little, after slashing it more than a year ago when the coronavirus pandemic crushed demand.
At stake is the current proposal that would see the world’s leading oil producers raise their output by 400,000 barrels per day (bpd) each month from August to December.
That would add a further 2 million bpd to markets by the end of the year, helping to fuel a hoped-for recovery in the global economy as the coronavirus pandemic is brought under control.
But that plan risks being delayed or even failing over a further proposal to extend the cap on incremental increases through to the end of 2022.
“The market is now fearing several scenarios,” said Bjarne Schieldrop, a Norway-based analyst with SEB.
In one, there is no deal and no increase in production, sending oil prices shooting up, he said. Another sees a “free-for-all (in) production and a collapse in the oil price”.
The hold-out is the United Arab Emirates (UAE), which on Sunday criticised the terms of that extension as unjust.
Oil prices, which had already been sliding over concerns about the global economy, slumped in April 2020 when the coronavirus spread around the world and battered global consumption, transport and supply chains. OPEC+ decided to withdraw 9.7 million bpd from the market and to gradually restore supplies by the end of April 2022.
Benchmark oil prices rebounded as a result. North Sea Brent and West Texas Intermediate, the most widely traded crude oil futures contracts, have lately been steady at around $75 a barrel, up by about half since the beginning of this year.
Published in The Express Tribune, July 6th, 2021.
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