Monday’s meeting never got started after attempts to mediate the dispute failed to make progress.
OPEC, Russia and other major oil producers failed to reach an agreement on proposed production increases on Monday — a third straight day of scheduled meetings without a deal.
The main sticking point has been the insistence of the United Arab Emirates, an important OPEC member, on a revision of its output quota. Efforts at mediation did not make enough progress for Monday’s meeting to even begin. OPEC said in a news release that the timing of its next meeting would be “decided in due course.”
Some analysts say that OPEC Plus, the 23-nation alliance of oil producers, will likely find its way to an agreement at some point, but the cohesion of the group that has helped raise prices over the last year looks badly damaged.
“There is a risk of the unwinding of the whole OPEC Plus arrangement,” said Bill Farren-Price, a veteran OPEC watcher who is director of global macro analysis at Enverus, a research firm. “You would still expect that calm heads will prevail,” he added.
OPEC Plus, which curtailed production last year when prices plummeted during the global economic slowdown, had been leaning toward an increase in production by 400,000 barrels a day each month for the rest of this year, beginning in August. There was also a proposal on the table to extend the current production agreement, which will expire at the end of April, for the rest of 2022.
But the talks, which opened on Thursday, were tripped up when the United Arab Emirates insisted on what would amount to a substantial increase in its production quota if OPEC Plus extended the output agreement.
Saudi Arabia, which along with Russia has come to dominate OPEC Plus, says revising the quotas — the country-by-country rules that govern how much oil each is allowed to produce — would lead to chaos because other countries would also insist on new deals. The Saudis have also been eager to extend the production agreement, which would ensure that the group’s output remains restrained for another year.
So far neither side has been willing to back down.
The tensions are an indication that increasing demand for oil, and rising oil prices, can test OPEC Plus. Prices have reached comfortable levels for many countries, and there is less incentive to stick together. Producers like the United Arab Emirates and Iraq want to make sure they don’t miss out on opportunities to sell more oil.
Oil prices have risen about 85 percent since late last year as global economies restart after the coronavirus pandemic. OPEC Plus has kept a tight leash on production during this recovery, keeping several million barrels a day of potential output offline.
“A disorderly return of that output could end the oil price rally,” Helima Croft, head of commodities at RBC Capital Markets, wrote in a note to clients. On the other hand, a failure of the group to agree on production increases in the coming days may drive prices up: Already some analysts say $100-a-barrel oil is a possibility.
Reflecting such concerns, Brent crude, the international benchmark, jumped about 1 percent on Monday to about $77 a barrel, the highest level since 2018.
The United Arab Emirates, whose oil is almost entirely produced by Abu Dhabi, is taking a bigger hit from the production restraints — a reduction of close to one-third of its estimated capacity — than other OPEC Plus members.
That has caused friction between the Persian Gulf nation and the group’s de facto leader, Saudi Arabia. Long a key Saudi ally, the United Arab Emirates has big aspirations to increase its oil output and otherwise expand its petroleum industry along with the rest of its economy.
Analysts say the United Arab Emirates has become increasingly frustrated with its position in OPEC Plus, where output decisions are largely made by Saudi Arabia and Russia, a non-OPEC member that the Saudis recruited in 2016 to give the organization more heft.
“They have made it very clear that their ambitions are to increase production, and they somehow think that no one is listening to them,” said Amrita Sen, head of oil markets at Energy Aspects, a research firm.
"again" - Google News
July 06, 2021 at 01:36AM
https://ift.tt/3hAFTGs
Oil Nations Again Fail to Reach Deal as U.A.E. Demands Higher Quota - The New York Times
"again" - Google News
https://ift.tt/2YsuQr6
https://ift.tt/2KUD1V2
Bagikan Berita Ini
0 Response to "Oil Nations Again Fail to Reach Deal as U.A.E. Demands Higher Quota - The New York Times"
Post a Comment