Oil: OPEC + agreement skips, price spike, but will it last?
It would appear that we have an answer, at least in the short term, as Bloomberg reports that OPEC + failed to reach a deal and canceled a meeting scheduled for today, leaving the oil market to contend with far more limited supplies than expected. .
The position of the United Arab Emirates has not changed and this has made it the troublemakers, when the other countries seemed to already all agree. The joint monitoring committee, the JMMC, took more time to consider the UAE's position and the country remains committed to an increase in OPEC production, they said.
This decision is implicitly bullish as there is no explicit increase in production through the oil cartel, which was achieved in drafting on Friday. The effect on prices was immediate:
However, this rise in the short term does not mean that in the medium to long the situation will change in diametrically opposite ways: in fact it is only a matter of time before the UAE does not decide to start pumping more oil. It could happen in a few months or a year, but if the deal is broken, it's only a matter of time. A greater injection of oil, exceeding its quota, will be a provocation towards other states.
The UAE is in a sort of isolation, but, in their defense, it must also be said that all the negotiations in Vienna had focused on Saudi Arabia and Russia, on the increases that these two states would have given to OPEC +. The base quota increase that would have been welcome in Abu Dhabi was not discussed, and these are the results. A break-up of OPEC + would leave everyone free to take advantage of the higher prices and, within months, we could see large quantities of new oil on the market, but for now we keep the prices high.
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The article Oil: OPEC + agreement skips, price spike, but will it last? comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/146667-2/ on Mon, 05 Jul 2021 17:26:59 +0000.