After a roadblock from the UAE, OPEC+ to reconvene oil policy talks on Monday

After failing to achieve an agreement on oil output strategy for the second day in a row on Friday due to the United Arab Emirates blocking several elements of the contract, OPEC+ will restart discussions on Monday.

The impasse may push out plans to pump additional oil until the end of the year in order to bring down oil prices, which have risen continuously to two-and-a-half-year highs.

With oil prices already trading at $75 a barrel, up more than 40% this year, the OPEC+ coalition may retain tougher output limits if no resolution is reached. More crude is desired by consumers to assist in the worldwide recovery from the Covid-19 outbreak.

Oil price increases are adding to global inflation, which is delaying the recovery from the coronavirus catastrophe.

In response to the Covid-19 crisis's destruction of oil demand, OPEC+ decided last year to cut output by about 10 million bpd starting in May 2020, with plans to phase out the cuts by the end of April 2022. Cuts have already reached 5.8 million barrels per day (bpd).

According to OPEC+ sources, the organization agreed on Friday to raise output by roughly 2 million bpd from August to December 2021 and to extend existing curbs until the end of 2022, rather than April 2022. The UAE agreed to let additional oil into the market but opposed the cuts being extended.

According to OPEC+ sources, the UAE protested that its baseline level, which is used to calculate any cutbacks, was initially set too low, an issue it had previously highlighted but was willing to overlook if the pact ended in April 2022, but not if it lasted beyond that timeline.

They also confirmed that the UAE desired a baseline output limit of 3.84 million bpd, up from the current 3.168 million bpd.

The remaining cuts would presumably remain in place if the UAE opposes the agreement, while there is a small risk the arrangement might break apart and all nations could pump as much as they wanted.

However, the group might agree to raise output until the end of 2021 while deferring consideration of extending the pact beyond April 2022. According to OPEC+ sources, the UAE has recommended this.