Experts are forecasting a big pick-up in demand as economic activity resumes in the second half of the year, while global oil stocks are approaching a five-year low. (AP)
If no deal is agreed, it would mean a big spike in the price of oil from August onwards
DUBAI: Global oil prices fluctuated on Wednesday amid reports that a deal had been struck between the UAE and OPEC+ — the alliance of oil producers led by Saudi Arabia and Russia — to guarantee supplies of crude to meet expected soaring demand this year.
However, the UAE Energy Ministry said talks with OPEC+ were continuing. “Deliberations between the concerned parties are still going on and an agreement has not yet been reached,” it said.
Brent, the global benchmark, ended the day 2 per cent down at $74.86 a barrel, having been well above that earlier on speculation that the UAE could increase daily output from the end of this month.
Talks at OPEC+ broke down just over a week ago after the UAE refused to accept the terms of a proposal from Saudi Arabia and Russia, and agreed by the other members of the OPEC+ group, to increase output from Aug. 1.
The UAE said it wanted to increase the baseline of 3.1 million barrels from which increases are measured in the April 2020 deal that stabilized oil markets after the pandemic crash.
If no deal is agreed, it would mean a big spike in the price of oil from August onwards. Experts are forecasting a big pick-up in demand as economic activity resumes in the second half of the year, while global oil stocks are approaching a five-year low.
There is no guarantee of a deal. Oil expert Robin Mills, chief executive of consultancy Qamar Energy, said: “We will have to see if this deal can be concluded.
“I expected a compromise like this, but not so fast. A substantial bump in the UAE’s baseline looks like a good result for it.”
But the UAE’s intransigence on baseline levels has spooked oil markets. Some analysts think it will lead to a free-for-all within OPEC+ as other members of the 23-member alliance seek to renegotiate their own previously agreed quotas.
Several members would not be able to produce enough oil even to meet their agreed limits, putting big producers such as Saudi Arabia at an advantage.