What the OPEC standoff means for oil prices and financial markets
Joe Klamar/Agence France-Presse/Getty Images
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A standoff between Saudi Arabia and the United Arab Emirates has investors once again questioning the future of the Organization of the Petroleum Exporting Countries, or OPEC, while weighing implications for crude oil and financial markets.
Oil prices whipsawed Tuesday, hitting six-year highs before pulling back sharply, as traders weighed whether the stalemate over a call to further relax output curbs would keep crude off the market or spark a production free-for-all.
OPEC’s obituary has been written before, so talk of the cartel’s demise should be taken with a grain of salt. But there’s no doubt the organization faces a significant challenge as one of its key members, the U.A.E., attempts to assert its own influence.
The Organization of the Petroleum Exporting Countries and its allies, including Russia, in approved a plan that cut oil production by 10 million barrels a day. They’ve slowly restored a chunk of that output as demand has picked up, leaving curbs of around 5.8 million barrels a day in place.
The group appeared on track last week to approve a proposal that would further ease existing crude oil output curbs by an additional 400,000 chatib online barrels a day each month from August through December – adding another 2 million barrels a day of production by the end of the year. The proposal also called for delaying the expiration of the underlying agreement on supply cuts from .
The U.A.E. Read more