(Bloomberg) — Oil fell for a fourth day in New York as concerns over the delta coronavirus variant rose, and the Saudi Arabia-UAE dispute kept the market guessing on the prospects for supply.
West Texas Intermediate futures lost 1.6%. The World Health Organization urged caution on the pace of reopenings worldwide, with many regions seeing infections spreading. Indonesia is in the throes of a major outbreak, Thailand is set to consider a partial lockdown, and Japan is planning to declare a state of emergency over the Tokyo Olympics.
The spat between Saudi Arabia and the United Arab Emirates derailed plans by OPEC+ to boost output in August and beyond to meet rising demand. While the impasse may tighten the market without extra supply next month, it also raises the possibility of a price war should producers opt to boost output unilaterally.
The row has spurred speculation the UAE may go so far as to quit the Organization of Petroleum Exporting Countries altogether, threatening the unity and control the group and its allies have fought hard for since the pandemic turned the oil market upside down at the beginning of last year.
“With the non-agreement, the supply side of the oil equation has been thrown into chaos,” said Tamas Varga, an analyst at PVM Oil Associates Ltd. in London. “Discord, let alone an output war, within OPEC+ will not be well received by the market.”
Crude’s decline this week comes despite another draw in U.S. stockpiles. The American Petroleum Institute said crude holdings fell almost 8 million barrels last week, while inventories of gasoline also dropped, according to people familiar with the data. Official figures are due later on Thursday.
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