OPEC+ finally reached a new production agreement last Sunday. It has been agreed that from August monthly production will be increased by 400,000 barrels of oil per day until April 2022.
After that, production will increase slightly faster with 432,000 barrels, as a result of changing the basic starting point. The latter was the reason for the failure of the earlier consultation.
The United Arab Emirates has now been allocated a higher production level, from 3.2 to 3.5 million barrels per day. They wanted 3.8 million barrels. Russia and Saudi Arabia are also allowed to produce a little more. 400,000 barrels a day is slightly less than the market initially hoped, but a larger deficit has been averted.
More supply, combined with uncertainty about demand as the Delta variant creates new coronavirus restrictions, leads to downward pressure on the oil price. As speculators are positioned for more price increases, closing these long positions can also lead to pressure on the price.
The next OPEC + meeting is scheduled for 1 September.
Oil was about one percent cheaper on Monday morning. A barrel of West Texas Intermediate already dropped almost 4 percent last week, because there was a prospect of a deal.