OPEC+ Oil Deal Hangs in the Balance as Key Member Rebels - Bloomberg #UAE

OPEC+ Oil Deal Hangs in the Balance as Key Member Rebels - Bloomberg

The OPEC+ alliance descended into bitter infighting after a key member blocked a deal at the last minute, forcing the group to postpone its meeting and casting doubt on an agreement that could ease a surge in oil prices.

The standoff between the United Arab Emirates and the rest of the cartel could ultimately mean that OPEC+ won’t increase production at all, according to a delegate. Without a deal it would fall back on existing terms that call for output to remain unchanged until April 2022. That would squeeze an already tight market, risking an inflationary price spike.

The dramatic turn of events leaves the market in limbo -- just as inflationary pressures are fixating investors with oil above $75. It also tarnishes the cartel’s carefully reconstructed reputation, raising the specter of the destructive Saudi-Russia price war of last year.

On Thursday, the Organization of Petroleum Exporting Countries and its allies appeared to have an agreement in principle to boost output by 400,000 barrels a day each month from August to December. It would also have extended the duration of the broader OPEC+ accord, setting the final expiry of the cuts in December 2022 instead of April.

That preliminary agreement was upended by the United Arab Emirates, which said it will block the deal until the baseline for its own cuts is adjusted, effectively raising its production quota, delegates said. Oil prices jumped in response.