Oil rises despite OPEC+ disharmony

06.07.2021 - Petr Mazaylo
Oil rises despite OPEC+ disharmony

Oil rose on Tuesday morning in Asia amid the Organization of the Petroleum Exporting Countries and allies’ (OPEC+) failure to reach a consensus to increase fuel output in August after days of deliberation.

Brent oil futures inched up 0.38% to $77.45 by 10:19 PM ET (2:19 AM GMT) while WTI futures flew 2.06% to $76.72.

The OPEC+ talks floundered on Monday as the United Arab Emirates (UAE) sought to increase supply against the proposal of Saudi Arabia to retain the restrictions on production. The group has yet to agree on a date for its next meeting.

Investors are apprehensive of the implications of the OPEC+ disagreement, fearing that it could potentially escalate into a conflict as damaging as 2020’s price war between Saudi Arabia and Russia that ushered the black gold into negative territory.

Regarding supplies, the market drops hope of an increase in output in August and will have a shortage of barrels even as the global economy strives to recover from COVID-19. OPEC+ put in about 2 million additional barrels a day from May to July 2021 to revive some of the supply that was discontinued as COVID-19 spread in 2020.

The oil group intended to increase its daily supply by an additional 400,000 barrels from August 2021 to April 2022. However, the plan was not put in motion as the UAE expressed disagreement unless it was granted the same terms for calculating its quota as Saudi Arabia.

Going over to the demand side, the economic recovery from COVID-19 in major markets such as the US and China is increasing demand for fuel even as the supply dwindles. The American Petroleum Institute (API) urged the OPEC+ in June to maintain balance in the market as global demand for fuel continues to rise.

Risk disclaimer "PROMETHEUS LTD – Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Republic of the Marshall Islands MH96960 is a financial services institution outside the European Union Area, which is subject to the supervision of the IFMRRC Certificate 0395 AA V0155 Trading in Forex/ CFDs and Other Derivatives is highly speculative and carries a high level of risk. It is possible to lose all your capital. 70% of trading deals can be unprofitable. These products may not be suitable for everyone and you should ensure that you understand the risks involved. Seek independent advice if necessary. Speculate only with funds that you can afford to lose. This Website may contain information in particular regarding financial services and products that could be regarded b a E.U. supervisory authority as an offer of financial services targeted in Europe. ESMA intervention measures do not apply to customers of PROMETHEUS LTD and it is your responsibility to choose a company which is most suitable for your trading needs. By clicking continue you confirm that you have read, understood and agree to the risk disclosures, terms of service, cash policies, privacy policies and this notice and that you are visiting this website on your own initiative, without any encouragement whatsoever from umarkets.ai or PROMETHEUS LTD." Cookies notification: We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we assume that you are happy with it. Read more. Continue

Help with deposit?