Oil maintained its gains and remained near US $ 75 a barrel after the Organization of the Petroleum Exporting Countries and their allies (known as OPEC +) delayed a much-anticipated decision on raising levels of production.
New York oil futures traded close to US $ 75 after jumping 2.4%. OPEC + was forced to postpone a decision on production after the UAE blocked a deal. The deadlock could ultimately lead to OPEC + not increasing supply, which would mean that the cartel would fall back on conditions that require production to remain stable until April 2022.
Postponing an increase in oil production could also lead to higher prices if OPEC + fails to come to an agreement.
Prior to the breakup, the alliance appeared to have an agreement in principle to increase production to 400,000 barrels per day each August through December to meet growing demand as economies recover from the pandemic.
OPEC + ministers will meet again on Friday as the dramatic turn of events leaves the market in limbo and tarnishes the cartel’s carefully rebuilt reputation after the costly price war between Saudi Arabia and Russia.
If OPEC + fails to reach a deal, it raises the possibility of crude oil skyrocketing and adding to mounting inflationary pressures in the global economy. Oil had just peaked at its better half since 2009, as the rapid rebound in energy demand in major economies outpaced supply response.