Oil prices fall on Monday with OPEC+ oil production deal

Oil prices fell on Monday afternoon during Asia hours by more than 2% as the OPEC and its allies decided to suspend oil production cuts.

Brent crude futures plunged 2.13% to $72.02 per barrel and US crude futures fell 2.09% to $70.31 per barrel.

The Organization of Petroleum Exporting Countries (OPEC) and its non-OPEC allies on Sunday decided to decrease the oil production cut by 5.8 million barrels per day by September 2022.

OPEC in a statement said that coordinated increases in oil supply from the OPEC+ group will begin in August. Since then, overall production will increase by 400,000 barrels per day monthly.

Earlier this month, United Arab Emirates and Saudi Arabia got in an argument which led to the delay in the decision of oil production cuts. UAE demanded its baseline—maximum volume of oil to be produced by the country—to be raised.

According to the deal signed on Sunday, five OPEC+ members’—UAE, Saudi Arabia, Iraq, Kuwait and Russia—baseline would be increased.

The baseline for UAE would be increased from 3.16 million barrels per day to 3.5 million barrels per day while Saudi Arabia’s baseline will be increased from 11 million to 11.5 million barrels per day.

(With inputs from CNBC)

Picture Credits: Reuters