Opec+ stalemate unlikely to last long: MUFG

Opec+ stalemate unlikely to last long: MUFG

While the July Opec+ meeting never concluded as the UAE, Saudi Arabia and Russia failed to overcome their differences, Opec+ has successfully stood the test of time and differences in the current standoff are surmountable, a report said.





The UAE asked for a higher baseline from April 2022 (when the current deal expires), whilst both Saudi Arabia and Russia asked for an extended commitment to December 2022, said the Mitsubishi UFJ Financial Group (MUFG), a Japanese bank holding and financial services company, in its latest Oil Market Weekly.





"Whilst this lack of agreement has introduced uncertainty into the Opec+ production trajectory, and ultimately global demand-supply balances, our base case that we catalogued on July 5 remains for a gradual 0.4 million barrels per day (b/d) increase in production on a monthly basis for the remainder of 2021 with talks of an extension past April 2022 postponed to a later date," MUFG said in the report.





The failure of Opec+ to reach an agreement on July 5 to increase supply initially pushed spot prices for Brent crude into the high $70s/b – levels not seen since 2018. Thereafter, oil prices have retraced its gains due to a strengthening US dollar, the continuing spread