European stock markets are seen opening lower Tuesday, as investors digest the collapse in talks over oil production levels between a group of major producers and the associated rise in prices.
The Organization of the Petroleum Exporting Countries and allies, a grouping known as OPEC+, abandoned oil output talks on Monday, carried over from Friday, after failing to agree a deal to boost production.
Any production deals within the group have to be agreed unanimously, and the United Arab Emirates rejected a proposal that would have increased output by about 2 million barrels a day between August and December 2021, as well as keeping the remaining limits on output to the end of 2022.
The lack of agreement helped push oil prices to their highest levels in nearly three years, adding to near-term inflationary pressures that threaten to undermine the global economic recovery.
At 2:05 AM ET, U.S. crude futures traded 2.1% higher at $76.70 a barrel, reaching its highest level since October 2018, while the Brent contract rose 0.4% to $77.46, climbing about $77 a barrel for the first time since 2018 this week.
Still, losses are likely to be limited in Europe Tuesday as the markets lack a strong lead. U.S. markets were closed on Monday for the Independence Day holiday.
On a more positive note, U.K. Prime Minister Boris Johnson outlined plans on Monday to end all restrictions put in place to combat the Covid-19 virus in two weeks, even though the number of cases associated with the highly contagious delta variant is still increasing.
Additionally, Germany announced plans to lift travel restrictions on fully vaccinated travelers from the U.K., and Portugal, from Wednesday, raising hopes of a summer vacation season.
German industrial orders slumped 3.7% in May, significantly below the rise of 1.0% expected, and the European data slate also includes Eurozone retail sales and the ZEW survey of economic sentiment in Germany for July.