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July 19, 2021 @ 10:59 +03:00
Oil prices fell nearly 1% on Monday morning during Asia hours after OPEC and its allies agreed to end oil production cuts. Brent crude futures fell 0.88% to $72.94 a barrel, while U.S. crude futures fell 0.97% to around $71.11 a barrel. But having a deal is “better than no deal” for the Organization of the Petroleum Exporting Countries and its allies — known collectively as OPEC+, according to an oil analyst who said a continued stalemate could mean rising production and plunging prices.
“I think they decided that having a deal was better than no deal,” Andy Lipow, president of Lipow Oil Associates, told CNBC. The group agreed to increase production by 400,000 barrels per day on a monthly basis from August, as it moves to phase out production cuts of about 5.8 million barrels per day by September 2022. It comes as oil prices hover close to their highest levels in more than two years.
Negotiations to increase production previously stalled, after the United Arab Emirates rejected the group’s proposal for the rollback of the oil cuts. It left the industry as well as investors in limbo as experts warned that prices could either hit the roof or collapse without an agreement. Last year, to cope with lower demand as the Covid crisis hurt economies and people could not travel much, OPEC and its allies agreed to curb output by almost 10 million barrels a day from May 2020 to April 2022.
OPEC+ oil deal sends prices lower — and this could be a buying opportunity, CNBC, Jul 19