OPEC+ ends Saudi, UAE stalemate
OPEC+ on July 18 agreed to raise production by 400,000 barrels/day each month for the rest of the year, ending an impasse between Saudi Arabia and the UAE.
A weekend virtual meeting of the oil-producing group ended with an agreement to boost production by 2mn b/d between August and December, marking an increase of 400,000 b/d each month.
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OPEC+'s restrictions to production will conclude by around September 2022 under the terms of the latest agreement.
The deal brings an end to an early-July spat over production quotas between Saudi Arabia and the UAEs The UAE wanted a new baseline level from which production cuts are determined, with Saudi Arabia arguing for an extended arrangement in return.
Fears were that if UAE was accommodated, other producers would want the same. Both Saudi Arabia and the UAE won out in the compromise agreement that sees production allotments increased for Kuwait, Iraq, Russia, Saudi Arabia and the UAE.
A research note from Swiss investment bank UBS notes that Saudi Arabia, the de facto head of OPEC, feels that some members might not be able to raise production despite the increased allotments. Nevertheless, the market turned south on the expectation of more crude oil on the market.
The price for Brent crude oil was down about 3% in early trading on July 19 to hover around $71/b. For the month, Brent is down about 5.3%.