Oil prices fell yesterday following the resolution between the United Arab Emirates (UAE) and Saudi Arabia. A successful execution of the deal would mean a rise in the supply of oil in coming months as the global economy recovers from the pandemic era doom.
Earlier, oil prices had been on a rising trajectory because of a dip in stockpiles and uncertainty related to future production by OPEC+. Prior to the standoff between the UAE and the other OPEC+ countries, the cartel had planned to increase production by 400,000 barrels per day till the end of 2021.
This target would potentially come into effect once all the OPEC+ countries approve the higher revision of the UAE’s baseline production target.
Commodity traders should, however, closely monitor the spread of cases caused by the Delta coronavirus variant as a sudden spike could retrigger a national lock down which would have an adverse impact on demand and hence oil prices.
Brent crude oil settled at $74.05 per barrel and U.S. West Texas Intermediate settled at $72.4 per barrel as of 11:18 p.m. EST.