Logo for the headquarters of the Organization of Petroleum Exporting Countries (OPEC).
Omar Max | Light Rocket | Getty Images
LONDON – According to CNBC’s Brian Sullivan, OPEC and non-OPEC ministers met on Friday without a resolution, and they will meet again on Monday to discuss oil production policy.
The Energy Alliance, commonly referred to as OPEC+, decided through a video conference on Friday afternoon whether to keep the output policy unchanged or to further increase the supply.
According to Reuters, citing OPEC+ sources, OPEC+ outside the United Arab Emirates agreed to relax production cuts and extend them until the end of next year. According to Reuters, the UAE stated that the condition for the postponement is to modify its benchmark output.
Affected by this news, oil prices rose slightly on Thursday, and lost momentum on Friday as traders digested the impact.International Brent Crude oil futures traded at US$76.03 per barrel, up 0.2% on the day, while West Texas Intermediate The settlement price of futures on Friday fell by 7 cents to US$75.16 per barrel.
Reuters quoted an unnamed OPEC+ source as saying that the OPEC alliance agreed in principle to increase the supply of 400,000 barrels per day from August to December 2021 to meet growing demand.
According to Reuters, the major OPEC country Saudi Arabia and non-OPEC leaders Russia also proposed to extend the period of production cuts to the end of 2022.
However, Reuters reported that the UAE opposes these plans on the grounds that OPEC+ should change its production reduction benchmark and effectively increase its production quota.
Independent oil analyst Neal Atkinson told CNBC’s “Squawk Box Europe” on Friday that the tensions between the UAE and other OPEC+ members “have been for some time.”
“The Abu Dhabi National Oil Company has been investing in new capacity and it has played a more active role in trade,” he said, adding that it may have started to be more like an international oil company than a national oil company. Unlike international oil companies, the decisions of national oil companies are often influenced by the state.
“They look to the future and they see that the demand for oil will continue to grow in the medium term, they have installed more capacity, and as we enter the 2020s, they hope to gain a greater share of the market,” he added .
Analysts at the risk consulting firm Eurasian Group said that they think it is still possible for the oil producer group to reach an agreement.
“The UAE may be negotiating, but it is unlikely to muster the courage to take risks until the end. It wants to avoid breaking the OPEC+ agreement and avoid rising oil prices leading to a rise in global inflation,” analysts said. On Friday, he pointed out that if prices continue to rise, the UAE’s own relations with Asian energy customers may be affected.
“Although the UAE’s withdrawal from OPEC+ should never be rejected, such a decision would be surprising. Such a move will damage Abu Dhabi’s relationship with Riyadh, its broad positioning in the region, and its ability to build long-term alliances. Therefore, Compromise seems to be the most likely outcome.”
OPEC+, led by crude oil producers in the Middle East, agreed to implement large-scale crude oil production cuts in 2020 to support oil prices when the coronavirus pandemic coincides with historical fuel demand shocks.
Led by Saudi Arabia, a close ally of the UAE, OPEC+ has begun to hold monthly meetings to guide production policy and has announced plans to increase its supply of 2.1 million barrels per day from May to July.
Analysts had previously expected the Energy Union to increase its supply by about 500,000 barrels per day starting next month, slightly higher than the reported 400,000 barrels increase.
Supported by the launch of the Covid-19 vaccine, the gradual relaxation of blockade measures, and the large-scale production cut of OPEC+, oil prices have risen by more than 45% so far in the first half of this year.
Wall Street’s U.S. investment bank is still bullish Enough space to run In the next few months.
As the oil price outlook is promising, the world’s three major forecasting agencies-OPEC, the International Energy Agency and the U.S. Energy Information Administration-expect the demand-led recovery to accelerate in the second half of 2021.
However, the global spread of the delta Covid-19 variant has exacerbated concerns about frustrated oil demand. For example, new lockdown measures and rising costs have led to a slowdown in the growth of Chinese factories.