After OPEC and its partners agreed to end oil output cuts, Oil Prices tumbled more than 2% in Asia on Monday afternoon. Brent crude prices were down 2.13 percent at $72.02 per barrel, while US crude futures were down 2.09 percent at $70.31 per barrel. According to one oil analyst, a deal is “better than no deal” for the Organization of Petroleum Exporting Countries and its partners, known as OPEC+. A sustained standoff might imply growing production and dropping prices.
Andy Lipow, president of Lipow Oil Associates, said, “I think they decided that having a deal was better than no deal.” As part of a plan to phase out production cuts of around 5.8 million barrels per day by September 2022, the group decided to increase production by 400,000 barrels per day every month starting in August.
It comes at a time when Oil Prices are nearing their highest levels in over two years. Negotiations to boost output had previously stagnated after the United Arab Emirates rejected the group’s request to reverse the oil cuts. It placed the industry and investors in limbo, with experts warning that prices would either skyrocket or plummet without a deal.
They would be left to their own devices if they didn’t have an agreement, and we may see a free for on raising output from all of them when the recovery of demand is still in doubt owing to the delta variation. He referred to the highly transmissible Covid version, which has spread to over 100 nations and caused instances in numerous countries to reach new highs. This deal should reassure market players that the group is not on the verge of disbanding and will not be ramping up production anytime soon.