ABUJA (CU)_For more than a year now, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) have restrained the supply of crude oil as demand crashed amid the COVID-10 pandemic. Accordingly, the output cuts currently being maintained amount to 6 million barrels per day (bpd). Meanwhile, any hope for an increase in the supply collapsed following a three-day meeting during which the group’s de facto leader Saudi Arabia refused to comply with the United Arab Emirate’s demands to raise its output under the organisation’s supply cut agreement.
This failure of the major producers to reach a deal, prompted anxiety over the possibility that supply may rise if the current output agreement is abandoned and this led to a fall in oil prices for a third day on Thursday (8 July). By 0158 GMT, Brent crude oil futures were down 43 cents to $73 a barrel, while a decrease of 51 cents was reported in US West Texas Intermediate futures as the price of a barrel reached $71.69.
Meanwhile, three sources told The Economic Times on Wednesday that Russia is attempting to mediate between Riyadh and the UAE, with the aim of striking a deal to raise the oil output.
Nevertheless, a large drop in United States’ oil stockpiles provided some support to prices, as two market sources told ET that for the week ended 2 July, the oil inventories in the world’s largest oil user fell by 8 million barrels. On the other hand, the pandemic continues to raise concerns in the oil market as Japan, the world’s fourth-largest oil user, is expected to declare a state of emergency for the capital city of Tokyo until mid-August on account of a new wave of infections reported from the country.
