OPEC+ has called a meeting on Sunday, delegates said, after the group made significant progress toward resolving a standoff with the United Arab Emirates that had blocked a deal to boost output.
The collapse of talks briefly sent crude to a six-year high in New York, although prices have dropped since to trade just below $72 a barrel on Friday.
Earlier this week, the two sides were said to be nearing a compromise that could give the UAE a more generous output limit next year and allow the rest of the group to raise production.
If there is a deal on Sunday, it is unclear how quickly additional supplies can be delivered to the market. August sales volumes are largely locked in and most Gulf countries are preparing for an Islamic holiday that will close government offices and businesses for most or all of next week.
Without extra output from OPEC+, the International Energy Agency warned on Tuesday that the oil market will “tighten significantly” and potentially damage the economic recovery.
The UAE’s dispute with OPEC+ centers around its demand for a higher production limit next year, in return for backing an extension of the cartel’s current agreement from April 2022 until December 2022.
At the previous OPEC+ meeting, Abu Dhabi asked to reset the baseline for its production cuts to about 3.8 million barrels a day next year, potentially increasing its production limit by more than 600,000 barrels a day.
Last week, the UAE was ready to set its new baseline at 3.65 million barrels a day, one delegate said. Another delegate said that figure was likely to change.
Oil analysts have warned that the UAE’s demand could open a “Pandora’s Box” for OPEC+ as other members seek better terms to redress grievances of their own. Sure enough, Iraq is also pursuing a higher production baseline, according to a delegate, who didn’t specify the number it’s requesting or when it would take effect.
Like the UAE, Baghdad has bolstered production capacity since the OPEC+ accord began with the assistance of international companies.