OPEC+ delayed its ministerial meeting until Friday to hold more talks on oil output policy, OPEC+ sources said on Thursday, after the United Arab Emirates blocked a plan for an immediate easing of cuts and their extension to the end of 2022.
OPEC+ sources earlier said the plan, on which top OPEC+ producers Saudi Arabia and Russia had reached a preliminary agreement, would see output rise by 0.4 million bpd a month from August to December 2021 to meet rising global demand.
Responding to oil demand destruction caused by the COVID crisis, OPEC+ had last year agreed to cut output by almost 10 million bpd from May 2020, with plans to phase out the curbs by the end of April 2022. Cuts now stand at about 5.8 million bpd.
Moscow and Riyadh had also proposed extending the duration of cuts until the end of 2022 to avoid a new glut next year.
But the UAE, which has ambitious oil output growth targets, objected to the proposal during the meeting, sources said, adding that it asked OPEC+ to change the baseline for cuts – a level of initial output from which reductions are calculated.
A higher baseline means a lower actual cut.
Brent crude was trading on Thursday above $75 a barrel , close to 2-1/2 year highs.
An OPEC+ technical panel on Tuesday had said it expected oil demand to grow by 6 million bpd in 2021 but flagged risks of a glut in 2022, saying there were “significant uncertainties” including an uneven global recovery and rising cases of the Delta variant of the coronavirus.
Saudi Arabia, Russia and other OPEC+ members have been cooperating closely since their big falling out in March 2020 just before the pandemic sent oil prices diving. The price crash drove them back together to forge their supply pact.