The Organization of the Petroleum Exporting Countries and its allies is scheduled to resume talks today (July 5) aimed at brokering a deal on crude output after the group failed to reach an agreement last week.
The energy alliance, often referred to as "OPEC+," voted last week on a proposal to increase oil production by roughly two million barrels per day between August and the end of the year in 400,000 barrels per day monthly installments. It also proposed to extend the remaining output cuts to the end of 2022.
However, the United Arab Emirates rejected those plans, blocking any agreement and leaving oil markets in limbo.
OPEC+, which is dominated by Middle East crude producers, agreed to implement massive crude production cuts in 2020 to support oil prices when the pandemic coincided with a historic fuel demand shock.
Led by Saudi Arabia, a close ally of the UAE, OPEC+ has since initiated monthly meetings in a bid to navigate production policy.
The UAE’s rejection last week of the proposed oil production increase has resulted in a rare public stand-off between the UAE and its long-time regional ally Saudi Arabia, OPEC’s de facto leader.
The dispute comes as energy markets anxiously await policy direction that is likely to shape crude markets into next year. OPEC+ is scheduled to reconvene today via videoconference at 2 p.m. London, England time.
Ahead of the talks, Brent crude oil futures traded at $76.44 U.S. a barrel, up 0.3% for the session, while U.S. West Texas Intermediate futures stood at $75.35 U.S., which was 0.25% higher.
Oil prices rallied more than 45% in the first half of this year, supported by the rollout of COVID-19 vaccines, a gradual easing of lockdown measures and massive production cuts from OPEC+. Analysts had expected the energy alliance to raise supply by around 500,000 barrels per day beginning in August.
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