​OPEC No Deal

The OPEC+ alliance could not arrive at an agreement after a key member blocked the deal at the last minute, forcing the group to postpone its meeting and casting doubt on an agreement that could ease a surge in oil prices.

​The unexpected turn of events leaves consumers uncertain as to whether OPEC+ will turn on the taps in let more oil flow to the market and ease the current tight oil supply and rising prices. It also tarnishes the reputation of OPEC+ as central bank of crude oil.

Earlier on Thursday, OPEC and its allies appeared to have an agreement in principle to boost output by 400,000 barrels a day each month from August to December. It would also have extended the duration of the OPEC+ deal, setting the final expiry of the cuts in December 2022 instead of April.

That preliminary agreement was put on hold by the United Arab Emirates which said it will block the deal until the baseline for its own cuts is adjusted, effectively raising its production quota. This could open Pandora's box as other members could demand production increases which would ultimately flood the market with too much oil.

The UAE’s cuts are measured from a starting point in 2018, setting its maximum capacity at about 3.2 million barrels a day. Expansion projects have since raised that number and the country wants its baseline reset to about 3.8 million barrels a day. The UAE argues that the change is necessary because, under the current terms of the OPEC+ deal, it is making proportionally deeper cuts than other members. They say that this unfairness would persist for even longer if the accord is extended until the end of 2022.

Russia and Saudi Arabia, the leaders of the group, rejected the UAE’s request. Talks will resume on Friday, allowing time for consultations at higher levels of government. So right now, the market is in hurry up and wait mode.