After talks between OPEC and its oil-producing allies were postponed indefinitely due to a failure to reach an agreement on production policy for August and beyond, oil rose to its highest level in nearly three years. West Texas Intermediate crude futures rose 2.06%, or $1.55, to $76.71 per barrel on Tuesday, reaching their highest level since October 2018. Brent crude, the international standard, climbed 0.39 percent, or 30 cents, to $77.46 per barrel, also at multi-year highs.
Discussions between OPEC and its partners, known as OPEC+, began last week as the energy alliance sought to determine output policy for the rest of the year. On Friday, the group approved a proposal to return 400,000 barrels per day to the market each month from August through December, resulting in an additional 2 million barrels per day by the end of the year. Members also suggested that the output cuts be extended until the end of 2022.
The United Arab Emirates, on the other hand, rejected these offers, and the group’s efforts to achieve an agreement lasted from Thursday to Friday. Discussions were supposed to resume on Monday, but they were postponed. OPEC Secretary-General Mohammad Barkindo said in a statement, “The date of the next meeting will be decided in due course.”
In April 2020, OPEC+ took significant steps to sustain prices by removing over 10 million barrels per day of production to keep costs stable as demand for petroleum goods fell. Since then, the group has been gradually returning barrels to the market, meeting nearly monthly to debate output policy.