Opec+, an oil exporters’ group led by Saudi Arabia and Russia, is meeting on Sunday to decide the course of future crude supply, the group said in a statement on Saturday.
Oil prices remained above $70 at the end of last week as markets awaited clarity from Opec+ producers over its output policy.
Brent, the international benchmark under which two thirds of the world’s crude trades, lost about 2.8 per cent over the past week to close at $73.59 on Friday, losing its gains from earlier in the month. West Texas Intermediate, the main gauge for US crude, shed 4 per cent last week to $71.81 at the close of trading.
Both benchmarks shed gains over the past three days as Opec+ continued to consider the UAE’s request to review the baseline used to calculate its quota.
The group’s plans to bring 2 million barrels per day back to the markets remain uncertain amid the ongoing negotiations, which leaves the market tightened.
“An agreement had not been reached yet,” the energy ministry said in a statement carried by state-run news agency Wam last week.
Earlier reports suggested that Opec+, which is headed by Saudi Arabia and Russia, acceded to the UAE’s request to move its baseline for quotas to April 2020.
Opec+ currently calculates the UAE’s quota using an October 2018 baseline, which sets its production capacity at 3.168 million bpd.
The Emirates, which is Opec’s third-largest producer, is investing heavily in raising its production capacity to 5 million bpd by 2030 and has called on fellow producers to use a more current baseline to allocate its quota.
Under the two-year-old baseline, the discrepancy between the UAE’s current production capacity and that of October 2018 is nearly 18 per cent – the highest proportion among producers within the bloc.
On Thursday, Opec kept its oil demand growth outlook for 2021 unchanged for the third consecutive month at 6 million barrels per day. The group also anticipated global oil demand returning to pre-pandemic levels of above 100 million bpd by the second half of 2022.
“Opec+ is looking increasingly likely to up output to satisfy rising demand as countries continue to reopen,” said Oanda analyst Sophie Griffiths.
“Oil demand has been the key driver of oil prices over the past few months as economies reopen and Opec+ has kept output limited. Demand is expected to increase, with Opec predicting oil demand to rise to pre-pandemic levels next year. However, output is likely to start playing a more significant role in influencing oil’s prices,” Ms Griffiths said.
“Near term, rising Covid cases are unnerving the oil market”.