OPEC and non-OPEC ministers finished Friday's meeting without a resolution and they will meet again on Monday on oil output policy, CNBC reported. The energy alliance met via videoconference on Friday afternoon to decide on whether to keep output policy unchanged or to ramp up supply further. OPEC+ except for the United Arab Emirates agreed to an easing of cuts and their extension to the end of next year, according to Reuters citing an OPEC+ source. The UAE said the extension is conditional to revising its baseline production, Reuters reported. OPEC+ had delayed its ministerial meeting until Friday to hold more talks on oil output policy, OPEC+ sources said on Thursday, after the UAE blocked a plan for an immediate easing of cuts and their extension to the end of 2022. OPEC+ sources earlier said the plan, on which top OPEC+ producers Saudi Arabia and Russia had reached a preliminary agreement, would see output rise by 0.4 million bpd a month from August to December 2021 to meet rising global demand. The deadlock has caught the market by surprise as it has got used to OPEC+ agreeing in shaping policy within a day in recent months but some of the alliance's members are now itchy to produce more of their oil, as the current high prices mean super profits. To produce more oil is what OPEC+ wants as well — the proposal yesterday was to boost output by 2 million bpd until the end of the year — albeit in a controlled and cautious way with a conservative 400,000 bpd production increase in August to start. A production increase of up to 500,000 bpd in August would be an actually bullish development when compared with the demand uptick that the summer is bringing. OPEC+ is mulling this gradual production increase and is not looking at bringing back too much production too quickly, as there is a big question mark over the demand of the shoulder autumn season. Potential vaccination delays, new lockdowns in some parts of the world and novel strain break-outs are causing some unpredictability for the speed of the demand recovery and OPEC+ has taken notice. Today oil is trading slightly lower for the moment, as traders are waiting to see what the extended OPEC+ meeting will finally bring. The gains of the previous day were trimmed in the late trading, when the UAE appeared to block the deal, demanding a higher production quota to match the lenience been given to Russia and Iraq. The UAE's bold move will push negotiations in the coming days, and the group is now more likely to consider a higher output level, perhaps even above the 1 million bpd threshold, if the supply hawks get their way. An increase above half a million bpd could bring some downside potential for prices, especially if paired with similar supply boosts from September, as traders will rightly worry about autumn's demand developments. If an increase between 500,000 and 1,000,000 bpd in August starts being discussed, prices may take a moderate dip on the prospect. On the other hand, if OPEC+ members don't have a deal and current output levels persist from August, oil prices are sure to climb further, creating a very tight market and making oil very expensive in what is a very busy season for gasoline consumption. Caution and optimism are swinging prices from gains to losses and it's exciting to see what will prevail in the end of this eventful day! — Agencies
