The Latest OPEC+ Agreement Is Historic; Experts Say

Published July 19th, 2021 - 12:00 GMT
OPEC+
The oil industry experienced historic volatility amid the COVID19 pandemic. (Shutterstock: FOTOGRIN)
Highlights
This week, the OPEC+ meeting ended with a long-awaited agreement to increase oil production significantly, so it meets global markets' requirements as business activities return to near-normal levels.

For almost two years now, the oil industry has experienced major changes followed by tactful decisions to maintain the industry's performance amid a number of global crises. 

Discussing challenges facing the oil industry, one cannot forget the unprecedented moment in which oil futures plunged to negative territories in April 2020, which came several weeks after most countries around the world went into total lockdowns in efforts to curb the spread of the novel coronavirus.

The April 2020 plummet has since been a nightmare for oil-producing countries, whose economies rely heavily on this commodity, such as GCC countries, which has consequently granted OPEC+ annual meetings very special importance.

This week, the OPEC+ meeting ended with a long-awaited agreement to increase oil production significantly, so it meets global markets' requirements as business activities return to near-normal levels.

Overcoming a disagreement between Saudi Arabia and the UAE over production rates, OPEC+ countries are going to start producing 400,000 barrels per month starting from August 2021, which is hoped to keep supporting oil prices until the end of the year.

While most oil-producing countries are bracing for years of recovery following signs of controlling COVD19, industry experts are anticipating a steady rise in oil prices until the end of 2021, which can climb as high as $80 USD a barrel.

Besides hopes that the latest agreement could help the industry's rebound following the pandemic, it could also require amendments in case Iran and the western powers reached a new agreement before the end of 2021, which could facilitate the return of Iranian oil into the global market.

Do you think that current global developments point at positive outcomes for the oil industry?


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