Following the impasse at OPEC + in which the United Arab Emirates and Saudi Arabia did not find an agreement,International Energy Agency (IEA) stated that the deficit is likely to increase between now and the end of the year causing a further increase in oil prices. Even higher crude oil prices could cause inflation to soar and jeopardize global growth.
The indecision at OPEC comes at perhaps the least opportune moment for the economy, when after the removal of the restrictions, oil stocks are below the historical average and global demand is expected to rise to 5.4 million barrels per day.
OPEC + was about to approve an increase in production of 400 thousand barrels per day until the end of 2022, but the negotiations were skipped on July 5 and were therefore postponed to September when the cartel will have to reunite.
However, even if the 400,000 barrels a day proposal passes, that may not be enough. Indeed, in June, the cartel produced an average of 40.9 million barrels per day, far less than the 43.45 million that the IEA estimates will be needed already in the second half of this year.
According to the IEA the chances of a price war to gain market share is no longer so remote and this could lead to a lot of volatility, which at the moment neither producers nor consumers would like.