Opec+ postpones meeting amid differences over output curbs

Delegates suggest the group is likely to extend curbs well into the end of next year

Iran appeared on Friday to be the main obstacle for an Opec deal to cut oil production. Bloomberg

Opec+, the oil exporters group led by Saudi Arabia and Russia, postponed meetings to discuss output increases to Friday, amid reservations from some producers.

The group convened earlier on Thursday as crude futures in New York crossed the $75 per barrel threshold for the first time in three years.

Oil prices are trading 50 per cent higher than at the start of the year.

Brent, the main international gauge for oil prices, and West Texas Intermediate, the North American benchmark, bridged their gap and were trading at similar levels late Thursday.

Brent rose 1.8 per cent to reach $75.96 per barrel at 10.26pm UAE time, while WTI surged 2.45 per cent to hit $75.27.

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Opec+, which came together last year to introduce historic production cuts to rebalance an oil market ravaged by the Covid-19 pandemic, had initially planned to keep the curbs until April 2022.

But delegates at the Opec+ session today suggested that the group is likely to extend the curbs well into the end of next year.

The group is also considering adding 400,000 barrels per day of crude every month from August to December, potentially returning 2 million bpd of oil back to the markets.

However, disagreements over the volume and pace of future cuts forced the meeting to adjourn to Friday.

Opec+ will now convene its joint ministerial monitoring committee at 3pm Vienna time, followed by its ministerial conference at 4.30pm.

"If the group announces a smaller than expected output hike, this could push oil prices higher," said Lukman Otunuga, senior research analyst at FXTM.

"However, a higher-than-expected production increase may exert downward pressure on oil prices in the short term."

Markets have already priced in a much-anticipated return of 500,000 bpd by the group.

Should Opec+ consider returning half a million bpd of production, the price response is likely to be "muted" given the recent rallies seen in the markets, Mr Otunuga said.

Updated: July 2nd 2021, 4:17 AM