Oil high, OPEC+ talks fail to result in agreement

(mtag101702) Editor: Doris Yu

investing. com – Oil rose in Asia on Tuesday. OPEC+ failed to reach an agreement to increase production in August after days of negotiations.

Brent rose 0.38% to $77.45 WTI rose 2.06% to $76.72.

Investors of the American Petroleum Institute (API) US crude oil supply report pending.

On the demand front, with the recovery of valuable economies, including China and the USA, from the Covid-19 crisis, fuel demand was supported and the increase in stocks decreased. In June, API urged OPEC+ to defend market stability amid rising worldwide fuel demand.

While the UAE, one of the cartel members, wanted to increase production, OPEC+ talks failed with Saudi Arabia’s proposal to keep production growth narrow. On the other hand, no date has been set for the next OPEC+ meeting.

Investors fear it will turn into a conflict as devastating as the price war in 2020.

OPEC+ reintroduced production around 2 million barrels per day from May to July. It would increase production by an additional 400,000 barrels per day in mid-August 2021-April 2022. However, the UAE said that it would not accept the offer unless its quota was calculated on one-to-one terms with Saudi Arabia.

In the short term, the market will not expect an increase in production in August and will be undersupplied amid the global economic recovery.

“With the already undersupplied oil market and supply growth failing to catch up with oil demand growth, OPEC+’s current production limits will push prices higher,” UBS Group AG commodities analyst Giovanni Staunovo told Bloomberg.

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