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Oil prices continued to rise on Thursday, with press reports suggesting that OPEC + is expected to raise its output by two million barrels a day (bpd) from August to December, but the deal was disrupted after the United Arab Emirates blocked the plan. to alleviate cuts and extend them until the end of 2022.
Brent’s global benchmark traded at $ 75.84 per barrel at $ 1.22, or 1.6%, while gross West Texas Intermediate (WTI) earnings were $ 1.76 or 2.4% at $ 75.23 a barrel. .
In the session, Brent and WTI reached their highest level since October 2018.
According to press reports, OPEC + ministers met on Thursday by videoconference to discuss a monthly increase of less than 500,000 bpd.
“If OPEC + maintains a conservative stance and prudently increases its production – and is definitely cautious up to 500,000 bpd – prices will be accepted, as demand will easily absorb that,” wrote Louise Dickson, an analyst at Rystad Energy Oil Markets.
The Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC +, discussed releasing taps to bring more barrels into the market as demand continues to recover after the plunder of the coronavirus pandemic last year.
According to a Reuters news report, OPEC + ministers agreed to postpone the appointment to Friday after the United Arab Emirates expressed reservations about extending supply cuts from the current April 2022 cut to the end of next year.
Gross demand is expected to increase in the coming months as the economy reopens and people arrive on the road during the popular travel season.
According to Rystad Energy, the world could increase demand by more than 3 billion bpd by the end of September.
“Rystad’s supply and demand balances indicate that in August 2021 it is calling on OPEC + to produce an additional 1.6 million bpd to keep the market in balance,” Dickson said.
Thursday’s OPEC + meeting is the final test to see if OPEC + wants to keep prices rising by keeping the demand curve behind or if $ 75 per barrel is enough. However, there is a risk that ads above 500,000 bpd will scale down as oil prices burn to dust.
OPEC + agreed to cut production by 9.7 billion bpd in May 2020 after the oil market disrupted the global economy after the outbreak of sub-zero prices. The cuts are about 5.8 million bpd.
The alliance led by Saudi Arabia and Russia helped harden supplies and raise prices.
Russia is the leader in countries that agree to produce more at an equal price – the price a country needs to finance its state budget and sell a barrel to balance books – is much lower than that of Saudi Arabia.
Riyadh has continued to push for the priority of prudently releasing supplies to maintain higher oil prices.
“With the Saudis being careful about production levels, I would guess that production growth will be staggered throughout the year,” Gregory Gause, head of the International Affairs Department at A&M University in Texas, told Al Jazeera. “The market certainly believes that the OPEC + meeting will not release a large amount of supplies.”
“What OPEC + doesn’t want is to go too far ahead of the curve and release too much supply too early and back in production and have to close the“ shoulder ”season with lower demand, which peaked in October,” Dickson said. Al Jazeera.
In a pre-pandemic world, a season with lower demand would be the main concern for producers.
But the emergence of the Delta variant promises that the recovery of COVID-19 will remain unbalanced, even if the demand bounces. Many countries, especially in the Asia-Pacific region, have yet to remove travel restrictions.
Although the demand for gasoline has recovered well and is reaching pre-pandemic levels in 2021, the need for aircraft fuel is still under tremendous pressure. International travel policies do not match, as some analysts have said the aircraft will not fully recover until the end of 2022 or 2023.
“The big downside risk remains that the pandemic is recovering, apparently not as smooth as everyone expected,” Gause said.
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