By Adedapo Adesanya
Brent crude oil rose above $77 a barrel for the first time since 2018 on Monday after oil producers under the umbrella of the Organisation of the Petroleum Exporting Countries and allies (OPEC+) failed to reach an agreement on bringing back curtailed output, leaving the market with tighter supplies than expected.
Also, the United States West Texas Intermediate (WTI) crude futures traded at $76.70 per barrel after it appreciated by $1.54 or 2.05 per cent yesterday.
OPEC+ started a meeting last Thursday to discuss crude supply for next month but an agreement could not be reached. The meeting continued the next day and a similar scenario played out, which forced the cartel to postpone the gathering to Monday.
But yesterday, the group could also reach a compromise, keeping current production limits in place for August and depriving the market of the extra barrels it needs as demand recovers from the pandemic.
They abandoned the meeting without a deal as a dispute between Saudi Arabia and the United Arab Emirates arose over plans that sought to extend a cap on oil production.
Saudi Arabia has led a push in OPEC to raise output by some 2 million barrels per day from August to December 2021 but extend remaining cuts to the end of 2022.
However, the UAE pushed back saying a cut in output beyond the initial deadline of April 2022 would be unfair.
The UAE has said the market is in dire need of higher production of crude oil following a plunge in oil prices and production last year as the pandemic hit travel and energy use.
Analysis showed that under the proposed deal, the UAE would proportionally cut its oil production by 18 per cent, while Saudi Arabia would cut its output by 5 per cent.
The group didn’t agree on a date for its next meeting, according to a statement from OPEC Secretary-General, Mr Mohammad Barkindo.
While demand signals are strong in Europe and the US, the virus is spreading again in parts of Asia, resulting in increased restrictions on movement.
The Delta variant, first detected in India, has led to spikes in cases around the world. It is becoming the second-most prevalent variant in the United States and it has forced Britain to delay its reopening by a month.
