The Day at a Glance | July 5 2021

The Top

*OPEC+ will have a meeting today to resolve differences and define plans for crude oil production for the rest of the year.

*Banxico must focus on inflation: Arturo Herrera.

*Consumer confidence in Mexico continues to recover (44.5 June; +1.5).

*The number of COVID-19 cases at a worldwide level linked two consecutive weeks of growth.

Economic environment

OPEC+ returns to negotiations. After negotiations failed among the Organization of the Petroleum Exporting Countries and its allies (OPEC+), its members will meet again in Vienna to resolve differences and define the crude oil production increases to be carried out the rest of the year. The organization was close to reaching an agreement to increase production in 2 million daily barrels between August and December of this year and extend its control on production until the end of 2022. However, the United Arab Emirates vetoed the decision as it is stands against the extension and is unsatisfied with how its production quota was calculated. Without unanimity, the organization cannot make decisions and markets are still waiting – as oil prices are close to their highest levels since 2018. Last year, OPEC+ agreed to withdraw close to 10 million daily barrels off the global crude oil market due to the pandemic`s impact; the figure is currently set at 5.8 million daily barrels since the pandemic has started to pass among advanced economies and demand of the energy resource has recovered. The lack of a new agreement to increase production would leave current restrictions on production in place and would impede a necessary rise in supply, something that would put even more upwards pressures on crude oil prices. However, another risk exists: OPEC+ not reaching an agreement could lead to the organization`s unity to break, which would lead to other countries to independently decide their levels of production – and cause high levels of volatility in the market.