Oil jumped to its highest level in nearly three years after talks between OPEC, and its oil-producing allies were postponed indefinitely, with the group failing to reach an agreement on production policy for August and beyond.
On Tuesday, U.S. oil benchmark West Texas Intermediate crude futures advanced 2.06%, or $1.55, to $76.71 per barrel, its highest level since October 2018.
International benchmark Brent crude rose 0.39%, or 30 cents, to $77.46 per barrel — also at multi-year highs.
OPEC+ Meeting on Oil Supply
However, the United Arab Emirates rejected these proposals and talks stretched from Thursday to Friday as the group tried to reach a consensus. Initially, discussions were set to resume on Monday but were ultimately called off.
“The date of the next meeting will be decided in due course,” OPEC Secretary-General Mohammad Barkindo said in a statement.
OPEC+ took historic measures in April 2020 and removed nearly 10 million barrels per day of production to support prices as demand for petroleum products plummeted. Since then, the group has been slowly returning barrels to the market while meeting on a near-monthly basis to discuss output policy.
Oil’s blistering rally this year WTI has gained 57% during 2021, meaning that ahead of last week’s meeting, many Wall Street analysts expected the group to boost production in an effort to curb the spike in prices.
“With no increase in production, the forthcoming growth in demand should see global energy markets tighten up at an even faster pace than anticipated. This impasse will lead to a temporary and significantly larger-than-anticipated deficit, which should fuel even higher prices for the time being. The summer breakout in oil prices is set to gather steam at a fast clip.” analysts at TD Securities wrote in a note to clients.