Oil prices in the spotlight, after the rumors reported by Reuters, according to which Saudi Arabia and the United Arab Emirates have finally reached an agreement, to raise the threshold from which to start for the agreements that will be made in the future by OPEC + . At this point, the alliance that includes both OPEC and non-OPEC countries such as Russia should call a new meeting to formalize the agreement. The tensions between Riyadh and Abu Dhabi had forced OPEC + to cancel the meeting, after three meetings in which no agreement on production had been reached.
The announcement of the OPEC + decision was expected on 1 July.
Nothing in fact, with Abu Dhabi saying no to a plan that would cover the period between August and December of 2021: the announcement was thus postponed to July 2, a day that ended, however, with yet another flop due to the no of the United Arab Emirates.
Ditto black smoke in the meeting of 5 July.
The tension was triggered by a proposal presented by Saudi Arabia and by the leader of non-OPEC countries, or by Russia: the proposal was to extend the duration of the cuts (those decided in the year of Covid-19, and in the process of easing with the gradual increase in supply), until 2022. The two top producers had already signed a preliminary agreement which, in principle, provided for an increase in supply by 400,000 barrels per day from August to December 2021, in order to center the demand which, with the reopening phase after (almost) the end of the lockdown, is constantly increasing.
It was something else that made the UAE turn up its nose: the fact that the cuts decided in 2020 – year of the Covid pandemic -19 – were extended to the end of 2022 without there being a revision of the production thresholds from which start:
“The problem is to have placed a condition on that increase (of the production decided until the end of 2021), that is to extend the agreement (of 2020 on cuts for Covid reasons) – explained to Cnbc Suhail Al Mazrouei, Minister of Energy for United Arab Emirates adding that what was proposed was simply not a good deal for the country. Now, Saudi Arabia and the Emirates have reached an agreement to raise that threshold to 3.65 million barrels per day. The deal reduces losses in oil prices: WTI retreated 0.11% to $ 75.17 a barrel, while Brent is flat with a change of -0.04% at $ 76.42. The contracts had marked a fall of up to -0.80% in the previous hours after the release of the data relating to crude oil imports by China, which fell by 3% from January to June on an annual basis: this is the first contraction since 2013, a factor that fueled fears about the sustainability of demand. Among other things, fears are also raised by the alarm on the Delta variant in the world.