On Tuesday, oil prices increased their premiums from the previous day and reached multi-year highs.
Dealers cited the reason that the Opec + oil network was initially unable to agree on an expansion of production.
A barrel (159 liters) of North Sea Brent cost $ 77.80 that morning.
That was 64 cents more than the day before.
The price of a barrel of the US West Texas Intermediate (WTI) rose more significantly by $ 1.75 to $ 76.93.
This means that Brent costs as much as it last did in November 2018. The price for WTI is even higher than it has been since November 2014. On Monday, the oil network Opec + repeatedly failed to agree on a production strategy for the second half of the year. A meeting was canceled without an alternative date. Actually, the 23 countries wanted to gradually expand their oil production from August. However, a dispute between the oil giant Saudi Arabia and the United Arab Emirates prevented an agreement.
The initially unchanged production will meet a foreseeable higher demand for crude oil, gasoline and diesel. This is ensured by the relaxation of corona restrictions in many countries. This speaks for a tendency towards rising oil prices. On the other hand, the dispute could endanger the reputation and ultimately the cohesion of Opec + and Opec itself. After all, Saudi Arabia and the Emirates are core members of the group. If individual countries stick to the agreed production quotas less or no longer at all, this could also put a strain on oil prices.
Meanwhile, the American government is trying to get the stalled negotiations going. "We are not involved in these talks, but government officials have been engaging with relevant capitals to press for a compromise solution that will allow the proposed production increases to move forward," said a spokesman in Washington on Monday. "The United States is watching Negotiations of Opec + and their effects on the global economic recovery from the corona pandemic exactly. " Stable oil market conditions are necessary to kick off the economic recovery from the pandemic, said aide to President Joe Biden, who did not want to be named.
The analysts at UBS expect a tighter oil market in the near future and an increase in the price of Brent to $ 80 by September.
An agreement is possible, it is unclear whether the failure of the negotiations in the coming months will mean that individual producing states will adhere less strongly to the applicable subsidy restrictions.
The publication of the new sales prices by Saudi Aramco's should provide more clarity in the coming days.
ING does not rate the likelihood of stable production as very high.
The current compromise will probably be broken without a new agreement, the potential for a price war is there, but everyone wants to avoid it.
One solution could be an agreement to increase production to two million barrels for the remainder of the year.
RBC Capital Markets has doubts about the emirates remaining in OPEC. That was already announced with a new target price in March. The dispute with Saudi Arabia goes beyond oil price policy.