OPEC Fails to Reach Agreement and Oil Prices Hits Record

July 6, 2021, | AtoZ Markets- OPEC did not get to and agreement and investors are pushing oil prices  to new levels, given the current uncertainty.

“The 18th OPEC and non-OPEC Ministerial Meeting has been called off”,  words of General Secretary HE Mohammad Sanusi Barkindo to all members of the meeting. Aftert this words, the General Secretary noted: “The date of the next meeting will be decided in due course and we will inform you accordingly.”

These few sentences after the failure of the OPEC meeting were the trigger for oil prices to reach new record highs.

The price of West Texas Intermediate crude advanced to $76.98 per barrel, the highest price since November 2014, as the breakdown in talks left the market without the extra supplies for next month it had been counting on.

A Tense Relationship Between Saudi Arabia and the UAE

After several days of tense talks, the Organization of Petroleum Exporting Countries and its allies abandoned their Monday meeting. A disagreement over how to measure production cuts upended a tentative deal to boost output and swiftly deteriorated into an unusually personal and public spat between Saudi Arabia and the UAE.

The last time those two countries clashed over oil policy, in December 2020, the UAE floated the idea of leaving the cartel. That dispute ended in a truce, but the breakdown in negotiations this time around was so severe that the group couldn’t even agree on a date for its next meeting, noted Bloomberg when referring to what happened.

What Are the Market Concerns?

The immediate consequence of the failure of the negotiations is that the production increase planned for August will not occur. This also leaves the market uncertain as to whether or not it will have the barrels needed to handle the recovery the global economy.

“We do not want a price war,” said Iraq’s Oil Minister Ihsan Abdul Jabbar. “And we do not want oil prices to rise to more than the current levels.”

All market participants have been attentive to whats happening, and from the United States, President Joe Biden declared that it is necessary to reach an agreement.

Today, state-run Saudi Aramco increased the prices of its Arab Light crude and other grades for August. On the other hand, Saudi Aramco’s price increases for US customers were much lower than for Asian buyers.

Meanwhile, demand in the second half will be 5 million barrels a day higher than in the first six months of the year, OPEC Secretary-General Mohammad Barkindo said last week.

Oil Prices Mark New Highs

A barrel of Brent oil has reached $ 77.83 per barrel, marking a new annual high in 2021, and a high of 2 years and 8 months. With the latest rise, the price of Brent oil in 2021 has managed to gain 52.94%, corresponding to a current gain of $ 26.94. Last week, Brent closed with a weekly gain of +1.22%.

Brent Price Evolution

2019 = + 29.01%.
2020 = -21.75%.
2021 = + 52.94%.
1-year  evolution = + 80.51%.
3-year evolution = + 0.87%.
5-year evolution = + 59.74%.

Brent Daily Chart

After marking highs, the price of the Brent benchmark has been dropping positions in the price chart, and is currently located around the $75.70 zone.

The next important support zone appears at $75.03, and if the price manages to breach it efficiently, it could descend towards the $73.06 zone. On the other hand, if the bulls gain control, the price has as following bullish targets at the levels of $ 76.77, $ 77.50 and $ 78.28.

What About WTI?

The price of a barrel of WTI crude oil today trades at $74.58, losing about -$0.58 versus the previous close of trading for August 2021 delivery at $75.16 on the New York Mercantile Exchange.

WTI price evolution

2019 = + 37.64%.
2020 = -20.71%.
2021 = + 54.92%.
1-year evolution = + 89.24%.
3-year evolution = + 4.08%.
5-year evolution = + 61.90%.

The price of a barrel of WTI oil has reached its 2021 annual high, and a 6-year 8-month high. The WTI price is used as a reference in the United States market.

WTI (West Texas Intermediate) crude is traded on the CME Group’s NYMEX exchange through futures and options.


In the meantime, investors are now expecting OPEC to set next meeting very soon. Something that will definitely help to define the direction that oil prices will take.

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