Global crude oil prices have dropped more than $1 a barrel, after the OPEC+ group agreed to boost output, ending a dispute between the UAE and Saudi Arabia.
Brent crude oil price fell by $1.08 or 1.5% to reach $72.51 a barrel, having declined almost 3% last week, reported Reuters.
The US West Texas Intermediate (WTI) crude futures fell $1.01, or 1.4% to settle at $70.80 a barrel.
On 18 July, the Ministers of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, have reached an agreement to increase oil supply by an additional 400,000 barrels per day (bpd) each month from August 2021.
By December 2021, total production from the OPEC+ to the market is planned to reach about two million barrels per day (Mbpd).
Moreover, the group and allies such as Russia have agreed on new production quotas for several members of OPEC+ in a bid to overcome internal divisions.
Effective from May 2022, the new production shares will be implemented for OPEC members, including UAE, Saudi Arabia, Russia, Kuwait and Iraq.
The latest deal puts an end to a dispute with the UAE, which disagreed with the OPEC+ members’ proposal to extend output cuts until the end of 2022, citing its low baseline production.
Subject to market conditions, OPEC+ also agreed to phase out the production cut of 5.8Mbpd of oil by September 2022.
Last year, OPEC+ agreed to cut production by 10Mbpd due to a drop in crude demand as a result of the pandemic.
The latest OPEC+ agreement comes in response to increasing oil prices, which surged to multiyear highs in recent weeks, due to recovering crude demand as the global economy continues to emerge from the Covid-19 pandemic.