After continuing escalation for seven weeks of gains, the oil prices are finally down the reverse trajectory again, a situation caused due to the latest OPEC+ spat that rendered an unclear speculative environment of what to expect in the coming future. Significant flaws and disparities in the ministerial discussions are prevalent in the United Arab Emirates.
According to WSJ, they have persistently opposed the agreement as they want to enhance their oil production before the decline in demand.The market is concerned with the threat imposed by the UAE’s anticipated plans to step out of OPEC. With a view of pumping 4M bbl/day, making the most of the favorable market scenario, according to Phil Flynn, serving as a market analyst at Price Futures Group during his interaction with MarketWatch.
The UAE’s negative response sabotaged a proposal introduced to ease the existing output curbs within a controlled system. The proposal was anticipated to allow a rise in production by 400k bbl/day every month through December, resulting in a revised and scheduled OPEC+ meeting being called with no further form decision.
In contrast, there is a popularly spreading understanding that the latest development is not entirely wasteful or nonbeneficial for the oil market as there still prevails the risk that the entire structure might collapse, resulting in a free-for-fall suggesting that way more oil would potentially get put forward in the market. Nonetheless, the oil prices are currently maintained in a touching distance of the recently spiked multi-Year highs.