Monday 05 July 2021 2:34 pm

Oil prices climb as Opec+ resume talks

Global oil prices hit their highest levels in three years today as fuel demand continued to pick up amid the reopening of the global economy after the pandemic. — Global benchmarks WTI and Brent Crude added 1.24 per cent and 1.34 per cent respectively on Wednesday

Oil prices climbed on Monday as an impasse among Opec+ over oil output levels extended into a third day.

Brent Crude was up 0.17 per cent to trade at $76.32 a barrel, while US WTI added 0.25 per cent to reach $75.35 a barrel.

Discussions have broken down due to the United Arab Emirates and Saudi Arabia disagreeing over how Opec+ should unwind oil output cuts enacted at the height of the pandemic.

Read more: Opec+ supply talks end in deadlock

The stalemate has wider implications for the global economy amid concerns that surging commodity prices could push inflation higher and slow the recovery from the pandemic.

Persistently higher price rises could prompt central banks to tighten monetary policy by quickly raising interest rates, making borrowing costs much higher for firms who are currently sitting on huge debt piles amassed since the onset of Covid.

If the alliance fails to reach a deal, the group could struggle to control prices in the future, analysts at Saxo Bank said.

The UAE is looking for better terms and have so far refused to join a deal that would increase production by 400k barrels per day per month from August to December.

Inflation in some developed economies is already running higher than central banks’ targets. Latest data from the ONS shows prices rose 2.1 per cent annually in the UK last month, above the Bank of England’s two per cent target.

The impasse comes as investors await to see how the US Federal Reserve is intending to tackle price rises when minutes from its latest meeting are published on Wednesday.