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The global crude oil prices continue to remain above the $75/ barrel mark as the cartel of oil-producing nations OPEC+ has failed to reach an agreement over increasing the oil production, raising concerns of a further hike in prices at a time when inflation rates are already touching the highs in various countries including India. On Thursday, oil futures were being traded above $75, up by 2.4% over the course of the day.
The OPEC+ member countries were on track to agree to increase the output rate by 400,000 barrels a day from August to December 2021. However, talks broke down at the last moment after the United Arab Emirates (UAE) blocked the proposed deal. If the OPEC+ countries fail to reach an agreement, they would continue with the existing mechanism under which oil production levels would remain unchanged until April 2022.
The ministers of the OPEC+ countries are expected to meet again on Friday to discuss the terms of the new agreement. If they fail to agree on an output deal, the prices of crude oil are likely to surge higher, increasing the pressure on major economies recovering from COVID-19 and already facing high inflation rates.
A non-agreement would further diminish the credibility of OPEC+, which was already reeling from the effects of the Russia-Saudi Arabia price war in March 2020, when quarterly oil prices fell by 65% following the failure to reach an agreement over production cuts.
OPEC+ is an informal agreement of oil-producing nations between Saudi Arabia led OPEC countries and Russia along with its oil allies.