Home
Industry
Energy

OPEC+ to meet on Sunday to discuss oil output deal

If there is a deal on Sunday, it is unclear how quickly additional supplies can be delivered to the market

by Bloomberg

July 18, 2021

OPEC and its allies will meet on Sunday, the latest sign that the standoff between Saudi Arabia and the UAE has been resolved.

Oil ministers will meet at noon Vienna time, the group confirmed. Officials have said privately in recent days that a full meeting would only be called if a deal was in reach.

A truce would open the way to more oil coming onto the market, easing a looming supply squeeze and averting an inflationary price spike.

The UAE has been arguing that the way its quota is calculated is unfair. To make its point, the country blocked a deal that the rest of the cartel had agreed to, which would have added 400,000 barrels a day each month.

The collapse of talks briefly sent crude to a six-year high in New York, although prices have dropped since to trade just below $72 a barrel on Friday.

Earlier this week, there were signs of progress between Saudi Arabia and the UAE toward an outline agreement that would have given the UAE a more generous output quota. Then on Saturday, ministers from Saudi Arabia, Kuwait, the UAE, Bahrain and Oman met online to discuss the matter, delegates said, asking not to be named because the information isn’t public.

If there is a deal on Sunday, it is unclear how quickly additional supplies can be delivered to the market. August sales volumes are largely locked in and most Gulf countries are preparing for an Islamic holiday that will close government offices and businesses for most or all of this week.

Without extra output from OPEC+, the International Energy Agency warned on Tuesday that the oil market will “tighten significantly” and potentially damage the economic recovery.

At the previous OPEC+ meeting, Abu Dhabi asked to reset the baseline for its production cuts to about 3.8 million barrels a day next year, potentially increasing its production limit by more than 600,000 barrels a day.

Last week, the UAE was ready to set its new baseline at 3.65 million barrels a day, one delegate said. Another delegate said that figure was likely to change.