The price of Brent crude oil rose above $77 U.S. per barrel for the first time since 2018 after OPEC+ failed to reach an agreement on production output, leaving the market with tighter supplies than expected.
The Organization of the Petroleum Exporting Countries (OPEC+) was unable to reach a compromise during talks on Monday (July 5), keeping current production limits in place for August and depriving the market of the extra barrels of oil it needs as demand recovers from the pandemic.
The latest talks came after the Saudis stood firm about raising output starting in August and extending the OPEC+ agreement to the end of 2022, while the United Arab Emirates (UAE) sought better terms for itself.
The failure by the group to reach an agreement and increase supply will further squeeze an already tight oil market, raising concerns about spiking inflation.
Most OPEC+ members backed a proposal to increase output by 400,000 barrels a day each month from August and push back the expiry of the broader supply deal into the end of next year.
However, the UAE sought to change the baseline that’s used to calculate its quota, a move that would allow it to boost daily production by an extra 700,000 barrels per day.
Crude oil rose for a third month in June as widespread COVID-19 vaccinations have helped revive demand while OPEC+ has curbed supply. But with oil prices at their highest level in more than two years, it has raised concerns over the impact on the global economy.
Brent crude oil prices for September rose 1.3% higher to $77.16 U.S. in London. There was no settlement for West Texas Intermediate oil on Monday because of the Independence Day holiday in the U.S.
