Tokyo — Oil prices extended gains on Tuesday, with Brent and West Texas Intermediate (WTI) hitting their highest since 2018 on the expectation that supplies will tighten further after Opec+ talks were called off just as global fuel demand recovers.
Brent crude climbed 32c, or 0.4%, to $77.48 a barrel by 4.08am GMT, after gaining 1.3% on Monday. It reached the highest since October 29 2018 at $77.61 earlier in the session.
WTI crude futures were at $76.69 a barrel, up $1.53, or 2.0%, from Friday’s close, having traded through a US holiday to mark Independence Day without a settlement. It had earlier hit its highest since October 3 2018 of $76.77 a barrel, just shy of the $76.90 peak that was WTI’s highest since October 2018.
Ministers of oil cartel Opec and its allies, a group known as Opec+, called off oil output talks and set no new date to resume them, after clashing last week when the United Arab Emirates (UAE) rejected a proposed eight-month extension to output curbs, meaning no deal to boost production has been agreed.
“Expectations of Opec+ not adding the extra supply to the market from August lent support on Monday, but investors are not keen to move in either direction from here due to uncertainty over actual actions by the Opec+ members from next month,” said Toshitaka Tazawa, an analyst at commodities broker Fujitomi.
Iraqi oil minister Ihsan Abdul Jabbar said on Monday that his country is committed to the current agreement with Opec and its allies and does not want to see oil prices soaring above current levels to achieve stability.
He also said he hopes that in 10 days there could be a date for the next meeting.
Opec+ agreed on record output cuts in 2020 to cope with a Covid-19-induced price crash.
The producers have been gradually easing the output restrictions, but a plan on Friday to lift output by about 2-million barrels a day from August to December 2021 and to extend the pact on a series of gradual output shifts to the end of 2022 was blocked by the UAE.
“The sticking point focuses on UAE production levels under more normal circumstances. This is an issue we would expect Opec to resolve prior to the termination of the current agreement in April 2022,” Alan Gelder, vice president at Wood Mackenzie, said in a report.
“These discussions will, however, likely prove difficult and protracted.”