Brent crude futures traded on Tuesday morning at $77.65 a barrel, up $0.6 for the session, while West Texas Intermediate U.S. futures were trading at $76.62, about $2 higher.
Oil prices rose in the first half of the year by more than 45%, helped by the introduction of the COVID-19 vaccine, gradual easing of the security measures and massive production cuts by OPEC. Crude oil rose 15% on the New York Mercantile Exchange to $76.32 a barrel while international Brent crude rose 13% to $77.20 a barrel. Oil costs rose by more than 4.5% in the first half of this year due to support for the introduction of the vaccine and large production cuts.
Although the United States is not a member of OPEC, the long-standing group of oil exporting nations, it closely monitors the new talks given their potential impact on the crude market in the coming years. There are fears that the alliance could fracture if no deal is reached, triggering a price war and volatility in the global oil prices at a time of uncertainty about future demand for oil, owing to ongoing gridlock in parts of the world and unequal vaccine distribution.
In this file photo of 6 March 2020, Saudi energy minister Prince Abdulaziz bin Salman al-Saud arrives at OPEC Headquarters in Vienna for a meeting of the Organization of Petroleum Exporting Countries (OPEC) with non-OPEC members. The OPEC emblem for the group of oil exporting nations is pictured at a loose gathering of members of the group in Algiers, Algeria. LONDON – Oil production group OPEC has plunged into a crisis as bitter intra-emirates between Saudi Arabia and the United Arab Emirates raises questions about the future of the oil cartel.
It means that no agreement has been reached before the end of July on a possible increase in crude oil production, leaving the oil market in limbo as global fuel demand has not fully recovered from the ongoing coronavirus pandemic. Oil production group OPEC and the non-OPEC producer group, the world’s most powerful oil producers, abandoned plans to meet again on Monday after last week’s meeting failed to reach agreement on oil production policy.
OPEC-dominated producers in the Central East agreed to make huge production cuts in 2020 to lower the oil prices during the Coronavirus pandemic, which coincided with a historic gas prices shock. But the ongoing pandemic has kept OPEC’s non-OPEC partners, a group of the world’s most powerful oil producers, together after a pandemic and split from the group.
As a result, Saudi Arabia, a close UAE ally, and OPEC met for months to sort out the production reports. In a rare public standoff between the United Arab Emirates and Saudi Arabia the two countries were engaged over the weekend in a media war to establish their respective positions. What was unusual about the incident was how few senior ministers, who were in international locations, took part in the media blitz and set out their positions.
The alliance between the young and ambitious prince has spurred a hawkish foreign policy that has led him to launch a military campaign in Yemen, boycott Qatar, and fight Islamist political groups across the Middle East. As Saudi Arabia tries to wean itself off the oil industry, it competes with the UAE for foreign capital and talent, but economists say it will take time to challenge the region as an economic, trade, and tourism hub. The plan was rejected because the United Arab Emirates wanted a higher starting point for its quotas and higher domestic production.
The rare public standoff between the United Arab Emirates and Saudi Arabia prompted the two countries to stage a media conference to expose their respective positions over the weekend. He said the UAE was ready to support short-term oil supply growth if it wanted better terms beyond 2022. The United Arab Emirates is not a member of the OPEC, the long-standing Organization of Petroleum Exporting Countries, but it is monitoring closely the latest round of talks, given its possible impact later this year on the crude markets. The OPEC logo is painted during an informal meeting of OPEC members in Algiers, Algeria.
On Thursday, the Organization of Petroleum Exporting Countries and its allies appear to have agreed in principle to increase production in August and December by 400,000 barrels per day. The agreement would extend the duration of the OPEC + agreement, which is due to expire in December 2022, until April.
OPEC, which dominates the Middle East as a crude producer, agreed in 2020 to make major crude production cuts to lower oil costs during the coronavirus pandemic, which coincided with a historic spike in demand for gasoline. The confusion came after Friday’s vote on a proposal to extend oil production from August through the end of the year by 2 million barrels a day at a monthly rate of 400,000 barrels per day. OPEC also proposed increasing the remaining production cuts through 2022.
The two countries led the embargo on Qatar and have been vocal supporters of the Trump administration’s sanctions against Iran. The plan rejected the UAE’s request for the next base limit of its quota, which would allow for additional self-production. Russia and Saudi Arabia, the group’s leaders, also rejected the United Arab Emirates. Proposal, the delegates said.