Oil prices slipped away from its previous $75 per barrel mark, as concerns about global supply and the spread of the new Covid-19 string tighten. The collapsed talks from the Organizations of Petroleum Exporting Countries (OPEC) was also a factor for the decrease, according to Reuters.
Firstly, Brent crude for September fell 86 cents, 1,1%, to $74.69 a barrel; while the West Texas Intermediate crude (WTI) for August was at $73.71 a barrel, down 85 cents, or 1.1%.; according to Reuters.
Secondly, last week, booth benchmarks had also lost around 1%; nevertheless, oil prices are still close to their high-records last reached in October 2018; in fact, Brent climbed to almost $80 per barrel last week.
Thirdly, the spread of the new Covid-19 variants, and the unequal access to vaccines around the world is also a factor of concern; as it threatens global economic recovery, finance chiefs of the G20 recognized on Saturday, according to Reuters.
Moreover, Rystad Energy analyst Louise Dickson said. “Traders are now refocusing on the spread of the COVID-19 pandemic; and global concerns over the new variants as the expansion is weighing on prices, despite tightening oil supplies globally.”
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Oil prices war might be ahead
In addition, as we reported previously, the two oil potencies in the Middle East are un the middle of a conflict, prompting OPEC and its allies, known as OPEC+ to halt negotiations over production curbs for 2022.
Furthermore, The United Arab Emirates wants to start rebounding oil production from August; while Saudi Arabia wants to keep a more cautious way, and to extend current production curbs to 2022.
Additionally, such failure to reach agreement is making the oil markets really worried, as a failure in agreements means less oil in the short term; but, also, a longer-term risk of producers abandoning the OPEC+ accords and start producing oil at will; which could end up in a prices war.
Finally, Stephen Brennock of oil broker PVM, said. “The market has been a bit negative as of late; amid the growing sense that the latest OPEC+ impasse could be a precursor to a pump-and-grab scenario, meaning a lot more oil potentially gets put on the market.”