As the Organization of the Petroleum Exporting Contries continue working with Russia to get a grip on global output oil prices have claimed higher than they have been in six years.
The group attempted for a third time calling a meeting to address billowing prices and growing consumption at a time when the economy is just beginning to open up but the meeting was canceled.
July 4th gas prices were among the highest in almost seven years at a national average of $3 a gallon, the WSJ reported. The price and demand increase is causing concern among executives and OPEC leaders that higher prices could impact the economic recovery from the pandemic and ramp up inflation.
During the pandemic, OPEC agreed to keep crude oil in the ground to limit supply, the WSJ reported. The United Arab Emirates backed out of the meeting Monday because it didn’t want to agree to a Saudi-backed deal to boost output.
Oil jumps as OPEC+ fail to reach agreement https://t.co/LXkCDRZO5t pic.twitter.com/KU4x8c16xs
— Bloomberg Markets (@markets) July 5, 2021
OPEC and its allies have three options, according to Hans van Cleef, senior energy economist at ABN Amro Bank, the WSJ reported. First, he thinks there is about a 50% chance that OPEC strikes a deal to raise its output in August.
Alternatively, the cartel could keep going at its current rate with existing quotas and rising prices, but van Cleef doesn’t think this is likely. Lastly, he said the group could fail to agree, which could result in oil prices plummeting to $50 per barrel.
If Opec’s can’t make a deal soon supplies could begin to dwindle. White House officials have been sucking up to “relevant capitals” in hopes that they can come to an agreement and get things moving forward.
