OPEC and a Russia-led
group of producers failed to
agree on how to meet fast-rising demand from the industrialized world, as the club of
rich nations emerges from
This week’s meeting of the
Organization of the Petroleum
allies, dubbed OPEC+, has been
hampered by conflicting signals about short-term and
Some of the historical dynamics of the oil markets have
been thrown upside down by
Demand growth from the
developed world, which for
years has stagnated, is on a
tear as it emerges furiously
from Covid-19 lockdowns.
Meanwhile, the developing
world—the source of almost
all new oil demand in years
past—is still sputtering.
A week ago, OPEC and allied producers led by Russia
were leaning toward boosting
production by half a million
barrels a day, with more additions possible later in the year,
The Wall Street Journal reported.
Going into formal deliberations being held virtually this
week, Saudi Arabia, OPEC’s de
facto leader, and Russia had
agreed to take up a proposal
that includes a boost of about
half a million barrels a day
starting in August, according
to people familiar with the
talks, and then gradually increasing OPEC+ output by a
total two million barrels
Those talks ended inconclusively, after the United Arab
Emirates objected, according
The group cut 9.7 million
barrels a day of production at
the start of the pandemic, and
has so far restored about 4 million barrels a day of that.
On Friday, most delegates
agreed to a deal that would
call for OPEC+ to increase production by 400,000 barrels a
day each month through late
2022, which would undo remaining curbs of about 5.8
million barrels a day.
The U.A.E. again balked, according to delegates.
Another wrinkle: A deal
may be conditional on the status of Iran sanctions talks
with the world powers.
Tehran is negotiating a resumption of an Obama-era
deal in which it would curb its
nuclear ambitions in exchange
for a lifting of sanctions on oil
Oil prices are now at their
highest since late 2018. On
Friday, Brent crude oil, the international benchmark, closed
up 0.4% above $76 a barrel,
and U.S. futures ended almost
unchanged at $75.20 a barrel.
drives in the U.S. and Europe
are boosting global economic
activity—and by extension, demand for oil. OPEC data
showed markets needed two
million barrels a day of extra
oil this year. Meanwhile, the
Delta variant of the coronavirus has wreaked havoc in India, an anchor of oil-demand
growth in normal times.
China, too, is seeing signs
of economic softening as consumers pull back amid isolated
outbreaks there. The country
is also struggling with supply
bottlenecks that have hampered production.
For now, the thirst for oil
from richer countries has become the key short-term demand driver. OPEC expects oil
demand in industrialized nations to increase by 2.7 million
barrels a day in 2021, up 6.3%.
More than half of that growth
will come from the U.S., at 1.5
million barrels a day, it said.
The trend will accelerate in
the second half, with a consumption boost of 3.1 million
barrels a day