On Tuesday, July 6, oil prices hit a six-year high after a rescheduled meeting to discuss terms of an oil production agreement was postponed indefinitely by OPEC and its partners, OPEC+ collectively.
After opening at $75.35, prices for West Texas International crude futures, the U.S. oil benchmark, rose to $76.98 on the 6th, higher than that price has been since November 2014. However, by close, futures had fallen to $73.37, and prices haven't topped $75 since then.
The now-canceled Monday meeting was set after the United Arab Emirates made a surprise rejection of a proposed agreement at a meeting on the previous Friday.
Along with extending the remaining output cuts through the end of next year, the rejected agreement would have added back 400,000 barrels per day to the market from August through December, ending at an additional 2 million per day by the end of 2021.
In April of last year, OPEC+ (OPEC and its partners) made the unprecedented decision to remove nearly 10 million barrels from the daily production of oil in order to stop prices from plummeting with the pandemic. As the global economy has recovered, the group has been consistently adding back to the oil supply on the market.
Prior to the indefinite postponement of the talks, a UAE spokesman said that it has a "sovereign right" to fight for better terms regarding production increases.
"For us, it wasn't a good deal," Suhail Al Mazrouei, UAE Minister of Energy and Infrastructure, told CNBC regarding the Friday proposal. "We knew that the UAE position in that agreement was the worst in terms of comparing our current capacity with the level of production."
"But an agreement is an agreement," Mazrouei continued. He also reiterated that the UAE "unconditionally" supports increasing production.
During the Sunday interview, the minister was also asked if the UAE would be willing to walk away from the talks the next day. In response, Mazrouei reiterated the UAE's right to ask for different conditions.
"I think we are all in agreement that we need to do something regarding the increase in production," Mazrouei told CNBC. "The issue is putting a condition on that increase, which is the extension of the agreement."
After initially postponing the Friday meeting to broker a deal until Monday, July 5, members gave up on the talks. After a two hour delay for a scheduled videoconference call, Reuters reported the event ha been postponed indefinitely, a statement later echoed by OPEC.
"The date of the next meeting will be decided in due course," OPEC said in a statement.
Until a new deal can be created, current levels and production quotas will be maintained.