As oil prices climb to their highest level in nearly three years, Saudi Arabia and Russia are working to reach an agreement to cautiously release more barrels to the oil market in the coming months, but officials postponed the final decision on supply policy until Friday.

OPEC and its partners other than the cartel held a preliminary meeting on Thursday to discuss the gradual increase in production by hundreds of thousands of barrels per day from August to December.

But they failed to reach an agreement on production levels and postponed the official meeting of the so-called OPEC+ group to Friday afternoon, when any decision needs to be formally signed by all member states.

People familiar with the matter said that OPEC and its allies are considering a proposal to increase production by 400,000 barrels per day, which is lower than the initial 500,000 barrels per day in recent weeks and months.

However, some sticking points still exist. The UAE and other member states are pushing to increase individual output quotas. The UAE believes that the initial supply restriction agreement reached at the height of the pandemic last year underestimated the country’s production capacity.

“The UAE has increased its production capacity, so under any revised agreement, they are pushing for higher output targets, which is understandable,” said Amrita Sen of Energy Consulting, an energy consultancy. , The company advises many OPEC member states.

“This seems to be a relatively small issue, but we have seen these debates close to breaking the OPEC agreement before.”

Traders and analysts have already wondered whether the trading volume under discussion is sufficient to stop the nearly 50% rise in oil since the beginning of the year, as demand rebounded from the depth of the pandemic.

As the Covid-19 crisis and the ongoing uncertainty caused by new variants of the virus loom over policymakers, Saudi Arabia is cautiously seeking to increase production.

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People close to Saudi Arabia stated that its strongest motive is that it does not want to see oil prices fall, but rather that oil prices rise slightly. This is not only to provide the country with more revenue from oil sales, but also because it believes in more. Investing in the country requires an energy industry.

Russia has been working hard to maintain its market share and has been lobbying for more active market share growth for several months.

Louise Dickson of consulting firm Rystad Energy said: “It may be the best interest for OPEC+ to stabilize prices at a high level while increasing production.”

The international oil benchmark Brent crude oil continued its rally on Thursday, with prices rising by more than 2.4% to over US$76 per barrel, close to the highest level since 2018. The price fell back to $75.61 later in the day. The US benchmark West Texas Intermediate crude oil reached US$75 per barrel for the first time in nearly three years.

Investment in this industry has dropped sharply in recent years, and traders and analysts have increasingly caveat If supply looks likely to be insufficient in the next few years, this could cause prices to jump above $100 per barrel-the price level that Saudi Arabia is worried about will eventually hurt its interests because it will accelerate the escape from oil.

Christian Malik, head of oil and gas at JPMorgan Chase, said: “Saudi Arabia believes that if it does not increase investment in global oil production, prices may eventually exceed the standard.”

“By allowing today’s oil prices to rise, they can avoid future oil price surges caused by current investment paralysis.”

Angolan Oil Minister Diamantino Azevedo (Diamantino Azevedo) said that although OPEC representatives predict that oil consumption will increase in the second half of 2022, they are concerned about the trajectory of the virus as the ministerial meeting begins on Thursday .

Azevedo said that OPEC expects “a strong rebound in oil demand in the second half of the year.” But he admitted that the virus is still causing “painful losses” to most parts of the world, and “thousands of people are still killed every day.”

Concerns about the new variant mean that ministers are considering continuing to restrict global supply beyond April 2022, when the initial production cut agreement reached at the height of the pandemic last year is about to end.

OPEC+ Group agreed in April 2020 to cut production by nearly 10 million barrels per day, accounting for about 10% of global demand, as widespread blockades and travel bans cut oil consumption. The group has begun to gradually remove the restrictions, and the current limit is slightly less than 6 million barrels per day.

Ann-Louise Hittle of energy consulting firm Wood Mackenzie said: “With the end of the work stoppage in the largest consumer countries such as the United States and China, demand will return to a more normal level every quarter.”

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