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Oil Declines After OPEC+ Agrees to Boost Production Into 2022

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(Bloomberg) – Oil fell after OPEC+ agreed to increase output in 2022, resolving an internal dispute that has shaken the alliance.

Brent crude fell 0.9 percent in early Asian trade after losing 2.6 percent the previous week, while West Texas Intermediate crude slid. The Organization of the Petroleum Exporting Countries and its allies will add another 400,000 bpd per month from August until all of its stalled production is revived. The agreement also provides Saudi Arabia, UAE, Iraq, Kuwait and Russia with higher baselines to measure their production cuts from May 2022.

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The complex pact, announced over the weekend following a row between Saudi Arabia and the United Arab Emirates, gives traders insight into how quickly the cartel will bounce back. back to the 5.8 million bpd it has remained on hold, since deep cuts last year early in the pandemic. It also addresses longstanding grievances that have tested alliance unity.

After soaring 45% in the first half, Brent has hit a patchy patch this month. The sharp outrage at OPEC+ has left investors confused about the group’s output plans as the spread of the delta variant raises concerns about the potential impact of new outbreaks on demand. bridge. However, with stockpiles dwindling, market watchers including the International Energy Agency say more barrels are needed to cover the expected shortfall.

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More infectious delta variants are still on the rise, especially among unvaccinated variants, with some countries having re-imposed stricter restrictive measures. In Asia, Thailand, Indonesia, South Korea and Singapore are all dealing with outbreaks. In another development, the UK on Saturday reported the most cases since January.

Oil traders will also be wary in the coming days for Iran’s first crude exports from outside the Persian Gulf and beyond the Strait of Hormuz. According to Vahid Maleki, Jask Oil Terminal Manager, the Islamic Republic plans to ship a shipment of crude oil from Jask in the Gulf of Oman.

© 2021 Bloomberg LP

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