Oil prices have recorded a decline of more than 1% following OPEC+’s decision to increase supplies after the collapse of an earlier agreement due to opposition from the UAE.
Brent crude witnessed a decline of 1% or 1.4%, to record $72.59 a barrel, after losing nearly 3% earlier.
Meanwhile, US crude fell 94 cents, or 1.3%, at $70.87 a barrel, after falling nearly 4% in the past.
On Sunday, OPEC+ ministers agreed to increase oil supplies starting from August to calm prices that rose to a two-and-a-half year high as the global economy recovered from the Coronavirus pandemic.
The group, which includes OPEC countries and allies such as Russia, agreed decisively on new production quotas from May 2022 after Saudi Arabia and other countries agreed to a request from the United Arab Emirates.
In a related context, the OPEC+ crisis threatens with dismantling the Saudi-led coalition, which works to regulate oil prices in the world.
Since the OPEC+ crisis, oil prices in global markets have witnessed a state of fluctuation between decline and rise, while investors fear of not reaching an agreement.
The oil market crisis may be existential for the OPEC alliance, which has reaped its successes since the second half of 2020 and supported the rise in prices above $75 a barrel from an average of $20.
Disagreements erupted between the UAE and the Saudi-led OPEC+ alliance, in an indication that the alliance could lose control of supplies, especially with the significant improvement in prices, and the tendency of many members to increase their production to reap profits, which portends a price war.
Since May 2020, the decisions of OPEC+ have been the driving force behind the recovery of oil prices, despite the variables of the Coronavirus, which still pose a threat to recovery.
Therefore, rapid and gradual production decisions are a key factor to prevent sudden price fluctuations, whether up or down.
OPEC+ suspended on July 5, 5-day talks, after the UAE rejected a Saudi-Russian proposal for a limited increase in production during the period from August to December 2021 while extending the production cut agreement until the end of 2022 instead of next April.
Because of the failure of negotiations, and the spike in the COVID-19 mutations the morale of crude dealers was negatively affected.