OPEC+ couldn’t make its mind up on changing its oil production cap at its latest meeting on July 1, so they postponed it to Friday in a repeat of previous meetings to discuss the size of the cap.
Wrangling in the group of OPEC members and Russia – again saw no agreement, and a handy 2% rise in world oil prices to levels not seen since 2018.
Brent crude settled at $US75.84 a barrel, up $1.22, or 1.6%. In New York, West Texas Intermediate crude settled at $US75.23 a barrel, gaining $1.76, or 2.4%.
Both were slightly lower in early Asian trading Friday morning.
During the session, both crude benchmarks jumped by more than $US2 a barrel, reaching their highest since October 2018.
The day ended with OPEC+, delaying its ministerial meeting until Friday to hold more talks on oil output policy,
Reuters reported that the cash strapped United Arab Emirates blocked a plan for an immediate reduction in supply cuts.
“Such a delay in talks is unusual and would appear to indicate some significant discord within the organization between participants,” said Jim Ritterbusch of Ritterbusch and Associates.
Reuters (which has good contacts in OPEC) said the group was expected to increase output by 400,000 barrels per day a month from August to December 2021.
“I firmly believe that in the near-term, OPEC+, led by Saudi Arabia, is looking to squeeze consuming countries and engender a higher price to make up for the damage done last year,” said John Kilduff, partner at Again Capital in New York, according to Reuters
Analysts say OPEC is and Russia are ignoring the possibility of increased supply from Iran, the spread of the COVID-19 Delta variant and weak seasonal US summer petrol consumption.
There have been several outbreaks of the Delta variant of the coronavirus, raising concerns that the recovery will falter.
The outbreaks are in the UK, parts of Europe, Ireland, southern China, Australia and the US.
Europe is especially vulnerable, according to the World Health organisation which Thursday warned of the rising dangers of new wave of coronavirus cases across Europe.
“A 10-week decline in the number of Covid-19 cases in the 53 countries in the WHO European region has come to an end,” Hans Kluge, the WHO’s regional director for Europe, warned in a media briefing.
“By August, the WHO European Region will be ‘delta dominant,’” he noted, adding that 63% of people are still waiting for their first shot, while restrictions on public life are likely to be lifted by next month. The U.K., for example, which has a high vaccination rate but also a large number of cases caused by the delta variant, plans to end restrictions on July 19.
