The meeting on July 2 between the ministers of the Petroleum Exporting Countries (OPEC) and its allies ended without an agreement on output.
|OPEC+ is expected to continue meeting to discuss oil output policy on July 5.|
According to CNBC, OPEC and its allies (referred to as OPEC+) failed to reach an agreement at an online conference on July 2 to discuss whether to keep the output policy unchanged or loosen more sources. bow. Therefore, OPEC + is expected to continue meeting to discuss output policy on July 5.
Earlier, Reuters, citing sources from OPEC +, said that OPEC + members, excluding the United Arab Emirates (UAE), have agreed to ease production cuts and maintain this situation until the end of the year. after. However, the UAE believes that the extension of output easing depends on the basic output adjustment.
After the above information, gOil prices rose before losing momentum in the July 2 session as traders took stock of the OPEC+ move. Brent crude oil futures delivery on July 2 edged up 0.2% to $76.03 per barrel, while US Brent crude futures fell 7 cents to $75.16 per barrel.
According to an unnamed source from OPEC+ of Reuters, OPEC has approved to increase supply by 400,000 bpd from August to December 2021 to meet increased oil demand.
Saudi Arabia (the country that leads OPEC) and Russia (the country that leads its non-OPEC allies) jointly proposed extending the time of production cuts until the end of 2022. However, the UAE opposed the plans. This is on the reason that OPEC + should change the baseline to calculate output cuts, effectively raising production quotas.
Independent oil analyst Neil Atkinson said tensions between the UAE and other OPEC+ members had been “boiling for quite some time”. “The Abu Dhabi National Oil Company has been investing in capacity building; it is taking a more active role in the oil trade,” added Neil Atkinson.
Expert Neil Atkinson said,Unlike international oil companies, the decisions of national oil companies tend to be influenced by the state. Look at Abu Dhabi National Oil Company, which probably started out as an international oil company rather than a national oil company.
“They’re looking to the future, they see oil demand continuing to grow over the medium term, they’ve installed more capacity and they want a bigger market share as we move through the 2020s,” said Neil Atkinson. About Abu Dhabi National Oil Company.
Meanwhile, analysts at risk consulting firm Eurasia Group think the OPEC alliance is still likely to reach an agreement.
“The UAE may be negotiating but may not muster up the courage to face the risks until the last minute. The country wants to avoid undermining the OPEC+ deal and is very likely to be blamed for the rising oil prices. causing global inflation to increase”, analysts Eurasia Group comment. Furthermore, the UAE’s own relationship with energy customers in Asia could suffer if oil prices continue to rise.
“While the UAE’s withdrawal from the OPEC+ agreement will certainly not be overstated, such a decision would come as a surprise. Such a move would damage Abu Dhabi’s relationship with Riyadh, Abu Dhabi’s great position in the region and its ability to build alliances over the long term, therefore, seems to be the most likely outcome.”
OPEC+ is an organization led by Middle Eastern crude oil producers. In 2020, OPEC+ approved a large cut in crude oil to save oil prices when the global outbreak of the Covid-19 pandemic caused both demand and oil prices to drop to historic lows.
Led by Saudi Arbia – a close ally of the UAE, OPEC + has adjusted the implementation of monthly meetings to set the direction of output policy during the Covid-19 epidemic. Also from these meetings, OPEC+ announced plans to increase supply by 2.1 million barrels per day from May to July.
Analysts expect the OPEC+ energy alliance to increase supply by about 500,000 bpd from next month, slightly above the previously reported 400,000 bpd increase.
The price of oil has so far increased by more than 45% compared to the beginning of the year, thanks to the support from the Covid-19 vaccine programs of countries, the move to gradually relax the blockade and distance, and the OPEC + cut the amount large output.
The outlook for oil prices remains positive as all three major oil market forecast agencies of the world, including: OPEC, the International Energy Agency (IEA), and the US Energy Information Administration (EIA) have all received confirmations. Oil demand is expected to recover quickly in the second half of 2021.
However, the rapid spread of the Delta variant globally is raising serious concerns that oil demand will be dragged back as the Covid-19 epidemic remains complicated. For example, recent lockdown measures and rising production costs have slowed production growth in China’s factories.