OPEC Undecided On Output, Oil Prices Remain Static

by Ship & Bunker News Team
Thursday July 1, 2021

Oil prices remained relatively unchanged on Thursday as the Organization of the Petroleum Exporting Countries (OPEC) and its allies leaned toward postponing a decision on whether or not to relax its output restrictions in the second half of this year.

Brent for September edged up 1 cent to $74.63 per barrel by 0048 GMT, while the West Texas Intermediate for August was at $73.46 per barrel, down 1 cent.

Of Thursday's OPEC meeting, analysts at ANZ stated that "Sideline discussions indicate that Russia is proposing to boost supply while Saudi Arabia wants a more cautious approach."

Early in the meeting, producers signalled a tentative agreement to only gradually increase supplies through the end of the year; however, the agreement wasn't ratified, and according to sources the United Arab Emirates said it would only give its support if the baseline for its own cuts was raised considerably.

Crude has risen around 50 percent this year, and Thursday's trading was driven by the assumption that the successful Covid vaccination rollout in many parts of the world would continue to fuel demand - and contribute to tight supplies.

But oil's remarkable recovery notwithstanding, some analysts worry about the consequences of rising prices: that they threaten India's fragile economic rebound is a matter of record, and on Thursday John Kemp, commodities analyst at Reuters, remarked, "if prices continue rising to $80 and more, the increase is likely to draw more responses from policymakers, businesses and motorists in the major consuming countries."

Kemp went on to note that historically when prices went above $80, "U.S. businesses and motorists have opted for smaller, lighter and more fuel-efficient vehicles to reduce operating costs.

"In the United States and Europe, with hybrid and full-electric vehicles widely available for the first time, a sharp increase in the cost of oil is likely to accelerate their adoption and reduce petroleum consumption."