OPEC+ meeting canceled, sending oil prices climbing higher

Oil prices climbed higher on the news. The price of Brent crude, the global benchmark which has has surged roughly 50% this year, rose another 1% to top $77 a barrel. No new date for a meeting was set after the announcement that that meeting was canceled.

The high drama comes as Americans hitting the road for the Fourth of July holiday are greeted by a seven-year high in gasoline prices, adding to inflation headaches already hitting the economy. The average price of a gallon of regular gas in the United States stands at $3.13, up 95 cents, or 44%, from a year ago.

The rebound has been driven in part by soaring demand for gasoline and jet fuel as the pandemic winds down and health restrictions ease.

Wall Street analysts have said that only OPEC+ can come to the rescue by pumping more oil to meet surging demand.

Yet supply is being held back because of an agreement between OPEC and allies including Russia, a group that is referred to as OPEC+. The partners have only gradually added back production that it aggressively sidelined during last year’s oil crash.

OPEC member the United Arab Emirates, which has invested heavily in recent years to boost its production, has argued publicly that the baseline from which its share of production cuts are calculated is too low.

UAE Energy Minister Suhail Al Mazrouei said over the weekend that the current deal wasn’t “fair,” arguing it had been forced to idle one third of its production while other countries were allowed to pump more relative to their maximum output.

“We cannot extend the agreement or make a new agreement under the same conditions. We have the sovereign right to negotiate that,” the minister said in a televised interview on Sunday.

For many years, the UAE and Saudi Arabia have been close partners, forming the region’s most important alliance and a powerhouse within OPEC. Saudi Arabia is the de facto leader of OPEC and the UAE was its third-biggest producer in 2020.

Yet relations between the two nations have been tense more recently and analysts said that could factor into the current OPEC deadlock. In fact, some OPEC watchers see a risk that the UAE could leave the cartel altogether.

— CNN Business’ Chris Isidore contributed to this report