The United Arab Emirates (UAE) and Saudi Arabia finally bridged the gulf between them, allowing OPEC+ to reach a deal that will increase oil output.
Oil prices have shot higher this year over concerns that supply wouldn’t meet increased demand from reopening economies. Prices soared even higher after the world’s major producers, including the UAE and Saudi Arabia, fell out over plans to increase oil production in the face of rising global demand.
The news left the oil market with tight supplies and pushed oil prices even higher.
Now, however, the 23-nation coalition, according to a statement, will increase overall oil production by 400,000 barrels per day on a monthly basis, starting in August.
The decision to put their differences aside and increase oil production comes after the International Energy Agency warned that the rift between the major oil producers could spike fuel prices, stoke inflation, and impede COVID-19 recovery.
The new deal signals the end of the conflict between Saudi Arabia, the world’s largest oil producer, and the UAE.
“We are here to stay,” Prince Abdulaziz bin Salman, Saudi Arabia’s oil minister, said at a news conference, according to the New York Times. “What bonds us together is way beyond what you imagine.”
It’s also poised to return oil production to pre-pandemic levels. For one thing, OPEC+ made a series of production cuts at the start of the pandemic in a bid to ensure the safety of workers.
Earlier this month, gasoline prices spiked when the world came to grips with the reality of the global health crisis, their highest levels in more than six years after OPEC+ failed to arrive at an agreement. Prior to the agreement, the group has only gradually added production that it cut during last year’s oil crash.
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