Cancel OPEC+ meeting place after a dispute over oil policy
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| OPEC+ Meeting |
After negotiations that lasted for hours, on Monday, July 5, 2021, the ministers of the "OPEC Plus" group canceled talks related to production after a dispute that erupted last week when the UAE objected to a proposed extension of production restrictions for an additional eight months.
OPEC + group is trying to preserve what oil prices have achieved during the last period after the increase in the price of oil as a result of the policy followed by the group, and Saudi Energy Minister Prince Abdulaziz bin Salman called for “some concession and some rationality” to reach an agreement, after discussions over two days failed Last week in progress.
Oil prices after the cancellation of the OPEC + meeting
As a result of the failure of negotiations today, the price of oil in the benchmark Brent crude, which was traded, rose 1% and reached 77.06 dollars per barrel, while West Texas crude only rose by 1.58% and reached 76.34 dollars per barrel.
Sources said that the UAE agreed with Saudi Arabia on Friday and the rest of OPEC + members to increase production by about two million barrels per day from August to December 2021, but it refused to extend the remaining reductions until the end of 2022 instead of the end of April 2022.
The UAE is upset about the baseline, which is the reference on which production cuts are calculated and wants to raise, and the UAE defends its right to increase production, which has invested billions of dollars to increase its production capacity. The baseline for its production was set at a very low level in the original agreement to reduce supplies.
It also says it was not the only one to demand a higher baseline because other countries such as Azerbaijan, Kuwait, Kazakhstan, and Nigeria have already requested and received new bases since the agreement to cut production was reached for the first time last year.
OPEC + sources said that the possible outcomes include increasing production from August or increasing it and extending the remaining reduction with the UAE giving a new, higher baseline, and the OPEC + dispute may reveal a growing rift between Saudi Arabia and the UAE.
Will there be a price war in crude oil?
The Iraqi News Agency quoted the financial advisor to the Iraqi Prime Minister as saying on Monday, July 5, that in the absence of coordination and understandings between the producers in OPEC and OPEC +, the beginnings of a price war will again form.
In addition, the increases in production within the OPEC member countries must be carried out with caution and in high coordination among the member countries themselves to avoid any possible glut in the crude oil supply market that may cause undesirable price imbalances.
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