Oil prices surged beyond $75 on Thursday as the Organisation of Petroleum Exporting Countries and its allies reached a tentative agreement to add limited supplies to the market in the coming months.
The International crude oil benchmark, Brent Crude, traded at $75.74 per barrel after gaining $1.12 while the U.S West Texas Intermediate rose by $1.14 to trade at $74.97 as of 5:39 pm Nigerian time on Thursday.
Bloomberg reported that oil futures in New York rose by 3.7 per cent to its highest same day level in three years as negotiations between OPEC+ and the leaders, Saudi Arabia and Russia, were ongoing.
The proposal under discussion would add about two million barrels per day to the cartel’s output between August and December, delegates told Bloomberg and Reuters.
Senior energy trader at CIBC Private Wealth, Rebecca Babin, was quoted as saying, “OPEC is looking like it is going to keep some restraint, and to me, the market is in a fantastic place. People are very comfortable and constructive with the profile over the next year.
“It is a pretty huge move, to be honest with you, and it indicates that over the next several months, there is probably going to be difficulty in getting enough crude oil for the summer driving season in the U.S,” Babin remarked.
Oilprice.com quoted sources at OPEC+ saying that any agreement to further unwind the curbs would hinge on the ongoing talks about Iran and the United States returning to the Iran nuclear deal.
The publisher wrote, “The OPEC+ group is also debating the extension of the current agreement beyond its end-date of April 2022. Delegates are considering potentially extending the deal until the end of 2022.
“The OPEC+ alliance keeps around 5.7 million barrels per day off the market. It will have returned by end of July two million barrels per day of supply recorded from May, as per the agreement earlier this year.
“Currently, another two million barrels per day gradual increase, if confirmed, signals confidence in demand recovery but also a more tentative approach than analyst expectations of at least 500,000 barrels per day production hike for August alone.”
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