DeHaan: OPEC Disagreements Stall Oil Prices
After weeks of a steady climb, and hitting one of highest prices we’ve seen in months, oil prices have flattened from last week’s high water mark. West Texas Crude was trading just under $74 per barrel in Monday’s action.
So, why the sudden price slowdown?
Patrick DeHaan with GasBuddy says it was triggered by UAE walking out of last week’s OPEC meeting. The tiny Persian Gulf nation was upset and disappointed that Saudi Arabia, and the rest of OPEC, was using an outdated oil production figure to establish their quota.
“That is the UAE has increased oil production significantly since 2018, but OPEC not acknowledging that rise in oil to set their quota. So, UAE was a little upset that their quota was low, because it was based on old production numbers, and the UAE wants to produce more oil. So, essentially, the disagreement is pretty low level. Everyone seems in line with wanting to increase oil production, but the UAE was upset they weren’t, in their words, ‘getting their fair share’.”
DeHaan noted it could take a while to get this issue resolved, which means production numbers will likely remain stagnant. He noted that coronavirus remains a concern for oil investors, saying the increase in the number of cases, specifically the Delta variant worldwide, is an issue.
“But for now, at least here in the United States one of the largest consumers of fossil fuels, we’ve only seen a very small uptick in the Delta variant and other variants. So, this is a potential threat, but at least for now, I think there is certainly reason that OPEC should increase production and that they are lagging behind here.”
DeHaan noted Americans are paying some of the highest fuel prices we’ve seen since 2014.
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