Oil’s Recovery Is Being Threatened by the Discord Rattling OPEC+

- Advertisement -
- Advertisement -
- Advertisement -
- Advertisement -

Oil’s recovery from a historic crash is being frustrated by a standoff between some of the world’s biggest crude producers.

The OPEC+ alliance still hasn’t set a date for its next meeting that’s intended to approve an extension of its deepest output curbs aimed at propping up crude prices. That’s because group leaders Saudi Arabia and Russia have lost patience with the errant behavior of the next-biggest member, Iraq, according to people familiar with the matter.

The producer group’s unity had helped drag oil back from its plunge into subzero prices in April, with most main players delivering their agreed share of output curbs. But some reneged on their commitments, and now Riyadh and Moscow are warning that they may phase out the supply curbs if those producers don’t change their ways.

Delaying the meeting “is for Saudi Arabia to have a chat with the rest of OPEC+ to give them time to throw trial balloons,” said Bart Melek, head of commodity strategy at Toronto Dominion Bank. “There’s a fair amount of confidence that the mid-month meeting is likely to extend cuts,” he said.

Saudi Arabia and Russia have already reached a preliminary deal to extend output curbs for an extra month. Riyadh has delayed the release of its July crude pricing until Sunday at the earliest, according to people with knowledge of the situation.

Complicating their task is the threat of rising U.S. shale output, which has been encouraged by oil’s rally. Higher prices have already spurred some producers to bring wells back online. EOG Resources Inc. and Parsley Energy Inc. are preparing to ramp up production just weeks after turning off the taps.

“It’s not an easy exercise for OPEC to balance the market,” said Olivier Jakob, managing director of consultants Petromatrix GmbH. The Saudis likely realize “they need to be careful about not helping the U.S. crude oil to come back too quickly.”

Dwindling Demand

While oil prices have rebounded rapidly since mid-April, the rally is faltering amid gathering headwinds. Civil unrest across America is also complicating the economic recovery from the coronavirus pandemic and risking a second wave of infections.

U.S. diesel demand fell to a 21-year low last week and gasoline stockpiles swelled, according to Energy Information Administration data, suggesting that fuel consumption isn’t recovering as quickly as anticipated.

Further stymieing demand, the White House is suspending passenger flights to the U.S. by Chinese airlines as relations between the two leading economies deteriorate.

This article was originally posted on finance.yahoo.com/news/.

Home of Science
Follow me

- Advertisement -




European Super League: ‘No action off the table’ over breakaway group – No 10on April 20, 2021 at 12:29 pm

FA and Premier League officials are told they have the UK government's support to stop the plans.The government will take "whatever action necessary", including...

Labour demands further probe into Boris Johnson’s flat revampon June 3, 2021 at 9:31 pm

The party wants the standards watchdog for MPs to look at whether Boris Johnson failed to register a donation.The party wants the standards watchdog...

Qualifier Karatsev ‘ready for everyone’ after reaching quarter-finals on debuton February 14, 2021 at 6:17 am

Russian qualifier Aslan Karatsev comes from two sets down to pull off another stunning victory to reach the Australian Open quarter-finals.Bulgarian Dimitrov, a semi-finalist...

Electoral Commission to investigate Boris Johnson’s Downing Street flat renovationson April 28, 2021 at 12:55 pm

The Electoral Commission says there are "reasonable grounds to suspect an offence" may have occurred.The Electoral Commission says there are "reasonable grounds to suspect...

Myanmar military take rebel town of Mindat, Chinlandon May 16, 2021 at 11:46 am

Anti-military activists in the town armed themselves following protests against the February coup.image copyrightReutersMyanmar's military has entered a small town in western Chin state...
Home of Science
Follow me