OPEC+ calls off oil output talks after Saudi-UAE dispute
Saudi Arabia's energy minister Abdulaziz bin Salman had called for compromise and rationality to secure a deal after two days of failed discussions last week, according to Reuters.
But four OPEC+ sources said there had been no progress. OPEC's Secretary-General Mohammad Barkindo said in a statement on Monday that the meeting had been canceled, without a date for the next one being agreed.
The failure of the talks, which had partly been about an increase in oil output from next month, helped to drive up international benchmark Brent crude, which was trading 1.1% higher at above $77 a barrel.
Some OPEC+ sources said there would be no oil output increase in August, while others said a new meeting would occur in the coming days, and they believed there would be a boost in August.
"There is no decision about August and discussions still continue. The market needs that oil," one source familiar with the talks said.
Oil prices are at the highest since 2018 and have already prompted concerns that inflation could derail a global recovery from the pandemic.
OPEC+ agreed on record output cuts of almost 10 million barrels per day (bpd) last year, about 10% of world output, as the pandemic hit. The curbs have been gradually relaxed and stand at about 5.8 million bpd.
Sources said: "The UAE on Friday accepted a proposal from Saudi Arabia and other OPEC+ members to raise output in stages by about 2 million bpd from August to December but rejected extending remaining cuts to the end of 2022 from the current end date of April without adjusting its current baseline production."
The UAE is upset about the low baseline from which its production cuts are calculated and wants it raised. Abu Dhabi had invested billions of dollars in increasing its production capacity and says its baseline was set too low when OPEC+ initially forged its pact.
On Monday, OPEC+ sources said the UAE's position was unchanged. They told a ministerial panel chaired by Saudi Arabia and Russia, the Joint Ministerial Monitoring Committee needed more time to discuss the issue.
The UAE has said it was not alone seeking a higher baseline. Others, including Azerbaijan, Kazakhstan, Kuwait, and Nigeria, had requested and received new ones since the deal was first agreed on last year.
The dispute reflects a growing divergence between Saudi Arabia and the UAE.
The public disagreement between the United Arab Emirates and Saudi Arabia over OPEC policy points to a growing economic rivalry between the two largest Arab economies, which only looks set to intensify.
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