Weekly Oil Report: Fears of Crude Surge

[vc_row][vc_column][vc_column_text]OPEC+ meeting ended up in an unsolved dispute with no consensus on the distribution. The group refused to stop the tight output plan while UAE had requested to increase its output. UAE is neglecting a huge proportion of its oil production capacity following the OPEC+ agreement, and it is not satisfied. OPEC’s de facto leader, Saudi Arabia, rejected UAE’s request to avoid other allies rising for the same demand. Oil reacted immediately, and Brent rocketed toward $77.44, the highest price since 2018. WTI shot up to $76.95 that was its highest since 2014. However, the rise did not last long, and they dived in. Brent closed at $75.96, and WTI got to $74.67 on Friday. According to analysts, the dispute among the oil producer nations may have boosted the rising trend of oil. Although Goldman Sachs predicted prices around $100 for oil before, economists expected a gradual increase. A fast rise in oil is toxic to the reviving economies. Central banks are trying to evoke inflation by keeping the interest rates near zero. Businesses and giant companies are in heavy debt to expand their production rates. If crude oil suddenly increases to higher prices, these companies will not be able to keep on producing. With a damaged production cycle, inflation will not be in favor of societies. Although the OPEC disagreement will lead to lower prices in the mid-term, traders should be cautious about short term consequences. Considering the high demand, supply blockages of oil products, and new variants of coronavirus, the rates will soar along with crude.[/vc_column_text][/vc_column][/vc_row]