Report<\/a><\/noindex> informs.<\/p>\n\u201cYou could very easily see oil hitting $100 a barrel \u2014 potentially even higher,\u201d he said. <\/p>\n
On the flip side, it\u2019s \u201cequally possible\u201d that prices could collapse too.<\/p>\n
\u201cIf there isn\u2019t any agreement on production, and countries tend to go off and do their own thing, or do their own production, you could have a collapse of oil prices,\u201d said Brouillette, who was US energy secretary from 2019 to 2021.<\/p>\n
OPEC and its allies, referred to collectively as OPEC+, twice failed to reach a deal on oil output last week. On Monday, another attempt to resume talks broke down, and discussions were put off indefinitely.<\/p>\n
The energy alliance, which includes Russia, had sought to increase supply by 400,000 barrels per day from August to December 2021 and proposed extending the duration of cuts until the end of 2022. Last year, to cope with lower demand due to the pandemic, OPEC+ agreed to curb output by almost 10 million barrels per day from May 2020 to the end of April 2022.<\/p>\n
The United Arab Emirates had indicated that, while it was supportive of the proposal to increase supply, it objected to the terms of the extension.<\/p>\n
Prices soared to three-year highs following the collapse of those talks on Monday. On Tuesday during Asia trading, they surged even higher. US crude pushed past $76 per barrel and international benchmark Brent was higher than $77 per barrel.<\/p>\n
Oil prices topping $100 would destroy demand, warned oil expert Dan Yergin, who said that it would not be in the interest of countries.<\/p>\n
\u201cI think countries recognize that $100 barrel oil would not be in (their) interest,\u201d Yergin, the vice chairman of IHS Markit, told CNBC. \u201cYou would see governments pour more incentives into electric cars, and see the impact on demand.\u201d<\/p>\n
OPEC+ is led by Saudi Arabia, a close ally of the UAE. But the breakdown of those talks, and UAE\u2019s objection to the terms, reflect a rare public disagreement between the allies.<\/p>\n
The discord between Saudi Arabia and the UAE has been \u201cstriking,\u201d Brouillette and Yergin both said.<\/p>\n
\u201cI find it striking that the UAE has stepped away from Saudi Arabia, a longtime ally within OPEC and OPEC+,\u201d Brouillette said.<\/p>\n
Yergin, too, said the contention between both countries was striking, given that both countries until recently had \u201cpretty much marched in lockstep.\u201d<\/p>\n
\u201cI think that one side or the other is gonna have to give in … there\u2019s going to have to be … a lot of, as they say, horse trading, to get to a deal and keep it together,\u201d he told CNBC on Tuesday.<\/p>\n
While they are on divergent paths in this matter, both actually have similar goals and require revenue from oil production for new investments, Brouillette pointed out.<\/p>\n
Even though the U.S. is not a member of the OPEC oil cartel and is not expected to be negotiating the price of oil, it\u2019s \u201cimportant that we have a mediating force,\u201d said Brouillette.<\/p>\n
\u201cThe United States is one of the big three producers of the world, and it\u2019s \u2026 important that we be at those conversations, and use the (Group of 20) and other forums that we have available to us, to bring in all of the world partners to hopefully mediate and mitigate some of the worst outcomes that can happen in these types of situations,\u201d he suggested. <\/p>\n
Brouillette also said to \u201ckeep a close eye on the Russians,\u201d who lead the non-OPEC countries.<\/p>\n<\/p><\/div>\n
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