US oil prices hit six-year high after OPEC fails to reach deal
US oil prices jumped to six-year highs Tuesday after OPEC failed to reach a deal on oil production — raising concerns that output could fail to keep up with surging demand.
Futures for West Texas Intermediate, the main US oil
benchmark, advanced 1.3 percent, or about $1, to $76.16 per barrel. At one
point, WTI crude reached $76.98, the highest price since November 2014.
Brent crude, the global energy benchmark, traded roughly
flat at about $77.04 per barrel, the highest price since late 2018.
The surging prices came after talks that began last week
between OPEC and its oil-producing allies, known as OPEC+, fell apart. The
group’s meeting sought to establish production policy for August and the
remainder of the year.
But a Saudi Arabia-backed plan to raise output and let the
price stabilize failed to win agreement, with the United Arab Emirates, a key
OPEC member, refusing to sign off.
Discussions were set to resume on Monday but got called off
in a sign of simmering tensions and stalling talks.
Analysts, including Warren Patterson, head of commodities
strategy at ING Groep, say that a production hike is necessary as demand for
oil continues to rise to pre-pandemic levels. Without a new production plan,
prices are likely to continue to rise, at least in the short term.
Americans are already feeling the crunch at the pump, with
national average gas prices over $3 per gallon at a seven-year high.
Companies involved in the energy industry saw shares rise
Tuesday morning in premarket trading. Occidental Petroleum stock rose about 1.6
percent in the premarket and shares of oil-field-services firm Schlumberger
rose about 1.3 percent.
The US has pushed OPEC to reach a deal that would see output
rise and tame the price.
“Administration officials have been engaged with relevant
capitals to urge a compromise solution that will allow proposed production
increases to move forward,” a White House spokesperson said Monday.
The Kremlin has also said that a new output plan is
necessary, though Russian President Vladimir Putin has no immediate plans to
make contact with top OPEC+ officials.
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