Oil prices could move to $100 per barrel: BMO's Randy Ollenberger
OPEC+ abandoned efforts to break a deadlock within the cartel for a second night, increasing the risk its failure to act will unleash an inflationary spike in oil prices.
Friday’s ministerial meeting ended without a deal as positions remained entrenched, with the United Arab Emirates still blocking a proposal to increase supply, delegates said. Negotiations will continue on Monday.
Failure to agree on raising output would squeeze an already tight market, potentially sending oil prices sharply higher. Although most OPEC+ members back a proposal to add 400,000 barrels a day from August to December -- and push back the expiry of their broader supply deal -- the UAE remains staunchly opposed, according to delegates.
The clash risks tarnishing the reputation of unity that the cartel has fought hard to preserve since it rescued the oil market from the depths of the crash last year. Abu Dhabi floated the idea of leaving OPEC in late 2020, and the bitter infighting over production quotas this week suggests tensions will persist.
Crude prices have risen around 50 per cent this year, with the recovery in demand from the pandemic outpacing the revival of OPEC+ supplies after last year’s deep cuts. The U.S. administration voiced its unease over high gasoline prices on Friday, while central banks have been fretting about inflation.
OPEC’s own data show that once-bloated oil inventories are back down to average levels as the recovery in fuel consumption continues. Demand in the second half will be 5 million barrels a day higher than in the first six months of the year, OPEC Secretary-General Mohammad Barkindo said on Tuesday.