Tag: Motley Fool

Shares in Payright Ltd (ASX: PYR) are shooting up this morning after the company announced a positive trading update for the fourth quarter of FY21. At the time of writing, the Payright share price has surged 9.8% higher, trading at 56 cents.

Payright is an emerging buy now, pay later (BNPL) company specialising in “more considered” purchases valued between $1,000 and $20,000.

What did Payright announce?

The Payright share price has opened stronger this morning after the company revealed that it had exceeded FY21 forecasts across all key metrics with a record fourth quarter.

In the quarter ending 30 June 2021, the company reported a record quarterly gross merchandise value (GMV) of $26.1 million, up 134% against the prior corresponding period (pcp). June saw a record monthly GMV of $9.2 million.

Payright also achieved a record ~6,000 new customers joining the platform in the June quarter, bringing total customer numbers to ~53,400 as at 30 June, up 58% on pcp.

Merchant stores had also increased in line with the company’s guidance, hitting 3,400 by the end of FY21. This represents a 41% increase compared to a year ago.

What did management say?

Payright Co-CEO Piers Redward welcomed the record-setting update, saying:

In what has been a record quarter for the business, we are pleased to have surpassed guidance in all key metrics, reiterating our ability to deliver on our growth strategy.

We are experiencing an increased interest and awareness of Payright’s business offering as a result of our ongoing national marketing campaign, which is helping the company build its presence in Australia and New Zealand.

Payright Co-CEO Myles Redward said the company had delivered on platform upgrades to merchant dashboard, customer application and checkout processes in the quarter. He said Payright expected to roll out “a healthy pipeline of new innovations, including our ‘Tap & go’ card technology” in the coming months.

The continued growth in customer and merchant numbers provides us further validation of the need and demand for Payright’s targeted offering, and we remain very optimistic about Payright’s growth outlook.

A long way to go for the Payright share price

Despite today’s advance, the Payright share price has tumbled 45% from $1.00 to 54.5 cents since its ASX debut on 23 December 2020.

The journey has been more painful for investors that participated in the Payright initial public offering (IPO), where the listing price was $1.20.

The post Why the Payright (ASX:PYR) share price has surged 10% today appeared first on The Motley Fool Australia.

More reading

• Payright (ASX:PYR) share price jumps 5% on positive quarterly update

Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Rhipe Ltd (ASX: RHP) share price is falling today after the company said it had agreed on terms with Norwegian company Crayon, to sell 100% of its shares for $2.50 each.

At the time of writing, shares in the company are trading for $2.48 – down 1.59%. By comparison, the S&P/ASX 200 Index (ASX: XJO) is 0.35% higher.

Let’s take a closer look at this latest update.

Why the Rhipe share price is in focus

In a statement to the ASX, Rhipe confirmed it will recommend that shareholders accept the bid Crayon submitted last week. The news sent the Rhipe share price surging to a new 52-week high of $2.56.

The bid for $2.50 per share represents a 30% premium on the 1-month volume weighted average price (VWAP) and a 37% premium on the 3-month VWAP of $1.82. Rhipe intends to pay a special dividend of up to 13 cents a share, fully franked before the transaction is finalised. Any amount paid by the board will be deducted from Crayon’s final payment. The deal is not conditional on finance or due diligence.

Shareholders should be able to vote on the deal in September, and if all goes to plan, the sale will be finalised by October.

In other news, Rhipe says its foreshadowed operating profit for FY21 of $18 million will be met. It also expects earnings before interest, taxes, depreciation, and amortisation (EBITDA) for the financial year to be around $17 million.

Management commentary

Rhipe Chair, Gary Cox, said

The rhipe Board has unanimously concluded the Scheme represents an attractive outcome for our shareholders, partners and customers, and staff. In the rhipe Board’s view, all cash price at a significant premium to the recent VWAP trading performance reflects the inherent value of rhipe’s business operations, platform, and growth strategy throughout Asia Pacific.

rhipe’s partners and customers will benefit from the broader global service capability from a combined Crayon and rhipe. In addition, Crayon’s offer is positive news for rhipe’s staff, as we believe there will be increased opportunities to develop new technologies and products and grow their careers.

The post Rhipe (ASX:RHP) share price drops after accepting takeover bid appeared first on The Motley Fool Australia.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The A2 Milk Company Ltd (ASX: A2M) share price has dropped this morning despite the settlement of a legal stoush. At the time of writing, A2 Milk’s share price is down 1.49% to $6.63.

The fall comes despite The Australian reporting the dairy company has settled its trademark dispute with Oklahoma family-owned ice cream chain Braum’s.

Let’s have a closer look at the details.

A2 Milk brand protection

Brand recognition and protection are incredibly important in a competitive industry. A2 Milk has fought fiercely to fend off other companies from using the ‘A2 milk’ definition. Previously, the milk company has won bouts against Lion and the ABC.

In its recent trademark dispute, A2 Milk issued Braum’s a cease and desist for its range of dairy products in May 2020.

These products are sold exclusively through the company’s 280 restaurants throughout Oklahoma, Kansas, Texas, Missouri, and Arkansas. A2 Milk took issue with the use of ‘A2 milk’ branding on Braum’s products.

Reportedly, the dispute has now been settled with the specific terms of the settlement confidential. However, sources are reporting that Braum will be given a grace period to make changes on its website and labels so they can advertise themselves as “A1 free”, rather than “A2 milk”.

A2 Milk Company US Chief Executive Blake Waltrip said:

We will always vigorously protect our trademark rights in the A2 Milk trademarks and are happy we have been able to reach a mutual agreement with Braum’s.

Curdling as competition heats up

ASX-listed A2M is not the only milk-maker attempting to trample competition over trademark infringements.

Similarly, US-listed oat milk producer Oatly Group AB (NASDAQ: OTLY) has been caught in a stoush with Glebe Farm Foods over a similar deal. Oatly suggests the smaller Glebe is infringing on its trademark with its name and packaging too similar.

(6/9) “Oatly says the name and packaging is too similar to theirs, but when we compare the two products side by side, we are surprised by this.” says Glebe Farm owner Phillip Rayner. I’m with Phil on this. pic.twitter.com/wrW75bq2pW

— Dave Rapson (@D_Rapson) June 17, 2021

https://platform.twitter.com/widgets.js

The case is being heard in the High Court in London and is ongoing.

Past year for A2M on the ASX

A2 Milk’s share price has taken a hit over the past year. The closure of international borders brought the company’s daigou channel to a halt. As a result of the excess supply, the dairy company’s products were severely marked down in value.

Over the year, the A2 Milk share price eroded by 65.7% to $6.73 a share. Consequently, the market capitalisation of A2M is now $4.85 billion.

The post A2 Milk (ASX:A2M) share price falling despite trademark settlement appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended A2 Milk. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Instagram CEO Adam Moserri recently released a video outlining the company’s second half priorities for 2021. While he outlined four areas of focus for the Facebook (NASDAQ: FB) company — creators, video, shopping, and messaging — Moserri spent most of his time discussing the potential product changes around video.

“We’re no longer a photo-sharing app,” he said. “The number one reason people say that they use Instagram, in research, is to be entertained.” With that in mind, Instagram is experimenting with more full-screen recommended videos in the main feed. That’s a major shift for Instagram and makes it more like TikTok.

Instagram wants to be TikTok

Over the last couple of years, TikTok has exploded in popularity. Its U.S. user base grew more than 87% in 2020, and it’s set to grow another 18% this year, according to estimates from eMarketer. What’s more, its users are highly engaged, spending more time, on average, on the social video app than the users of any other social media app. Younger users, in particular, are spending huge amounts of time on the app, even more than YouTube.

It’s no wonder Instagram has been working to copy the secret sauce that makes TikTok so addictive. It released Reels last summer, and it’s been quick to expand the feature to new markets and add functionality over the last year. In June, Instagram started showing ads between Reels, indicating it’s seeing strong engagement that’s worth monetizing.

But what makes TikTok so engaging is that you see fresh content every time you open the app. Instead of seeing videos from the users you follow, the default view is TikTok’s recommendations. And the recommendations are really good.

Instagram’s certainly capable of developing an algorithm that surfaces the most interesting videos for each user when they log in. It, along with its parent company, has a ton of data on its users’ likes and dislikes. In fact, it already has a version of algorithmic recommendations in the Explore section of Instagram.

Putting that algorithm to work earlier in the user experience, right when users open the app, and highlighting the best content on Instagram can increase engagement. And with the new monetization tools Instagram introduced in June, it could lead to more revenue as well.

Stemming the flow of users to TikTok

As mentioned, TikTok has seen enormous user growth over the last couple of years. While growth will slow in 2021, it’s still expected to add users at a faster pace than any other major social media app.

What Instagram needs to accomplish is to stem the flow of users from its app to TikTok. It’s not that users are abandoning Instagram, it’s just that they’re splitting their time between Instagram and other apps. If Instagram can capture the engagement it’s bleeding to other apps, it’ll be in a stronger position to monetize its users. Not only will it have more time to show ads, but marketers will find its competitors less appealing since they won’t have the mass engagement and reach of Instagram’s billion-plus users.

Instagram successfully accomplished this when Snap‘s (NYSE: SNAP) Snapchat threatened its engagement. The launch of Stories had a noticeable effect on the competitor’s growth for a couple of years before Snap could pivot to more of a media and entertainment focus.

One of the biggest reasons for its success with Stories is that the format is prominently featured in the app when users open it. Stories sit right at the top of the main feed. Giving Reels, its TikTok clone, a similar treatment by putting recommended videos in the feed could have a similar effect.

So, not only does Instagram hope to meet the demands of its users for more entertainment in the app, it’s hoping it can prevent them from looking elsewhere, too. If it works out, Reels could become a significant growth driver for engagement and revenue, just as Stories has over the last few years.

This is just the latest move from Facebook and its subsidiaries that helps ensure it keeps its dominant position in social media and digital advertising despite increased competition and regulatory pressure. That makes the stock very appealing, even with shares priced near the stock’s all-time high.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Instagram’s top priority for the rest of 2021 appeared first on The Motley Fool Australia.

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Adam Levy owns shares of Facebook. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Facebook. The Motley Fool Australia has recommended Facebook. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The Bigtincan Holdings Ltd (ASX: BTH) share price is storming higher on Tuesday morning.

In early trade, the sales enablement platform provider’s shares are up 4% to $1.17.

Why is the Bigtincan share price storming higher?

The catalyst for the rise in the Bigtincan share price on Tuesday has been the release of a positive contract update this morning.

According to the release, the company has signed an extension agreement with existing US based telco giant T-Mobile. The new agreement extends its contract by $6.3 million in total contract value over a two-year period. This means the T-Mobile total contract value now stands at $18.4 million since its initial deployment.

That initial deployment occurred in 2017 when Bigtincan won a competitive tender to implement the Bigtincan Content Hub across 5,500 retail stores on up to 23,000 mobile devices. It has now been extended to include the use of Bigtincan Learning Hub across customer facing sales users.

Management notes that this new agreement reflects its “land and expand” business model. This model is designed to enable the company to achieve long term growth through contracts that are underpinned by strong unit economics, created through investment in the core technology platform, coupled with smart tech focused M&A.

It highlights that the strong unit economics are underpinned by the cost of acquisition being lower than the high customer lifetime value of a contract like today’s agreement. This is contributing to growth of its Lifetime Value (LTV) metric and a strong LTV/CAC [customer acquisition cost] metric.

At the end of December 2020, Bigtincan achieved an LTV of $363 million. This was up 44% from the same period a year earlier. In addition to this, it has achieved an LTV/CAC of between 3.5 and 4.5 since the first half of FY 2018.

Following today’s gain, the Bigtincan share price is now up by an impressive 37% over the last 12 months.

The post Bigtincan (ASX:BTH) share price storms higher on T-Mobile contract update appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended BIGTINCAN FPO. The Motley Fool Australia owns shares of and has recommended BIGTINCAN FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Ramsay Health Care Limited (ASX: RHC) share price is edging lower on Tuesday.

At the time of writing, the private hospital operator’s shares are down 0.5% to $62.88.

Why is the Ramsay share price edging lower?

Investors have been selling Ramsay’s shares this morning after it provided an update on its attempts to acquire UK-based private hospital operator, Spire Healthcare.

According to the release, Ramsay has increased its cash offer to acquire Spire to 250 pence per share in cash. This compares to its previous offer of 240 pence per share.

This values Spire’s entire issued and to be issued share capital at approximately GBP1,041 million (A$1,900 million) on a fully diluted basis, and approximately GBP2,105.3 million (A$3,866 million) on an enterprise value basis.

Ramsay notes that the revised offer represents a premium of approximately 30% to the closing price of Spire shares on 25 May 2021. Furthermore, it is a premium of 54% to the volume weighted average Spire share price over the 180 day period ending 25 May 2021.

Final but not quite final offer

Management advised that this offer is final and will not be increased. However, Ramsay reserves the right to increase the offer price if there is an announcement of an offer or a possible offer for Spire by a third party offeror or potential offeror.

Ramsay’s CEO and Managing Director, Craig McNally, said: “We are confident that our 250 pence cash offer per Spire share, which was reached after extensive negotiations with the Spire board, is fair and reasonable. It is therefore our best and final offer.”

“Ramsay is a global health care operator delivering a wide range of acute and primary healthcare services to private and public patients from over 500 locations across 10 countries caring for 8.5 million+ patient visits and admissions per annum. We have been operating in the UK market for 15 years and as such have strong operational insight and a good appreciation of the industry dynamics and long term outlook for the market. We have called on this deep understanding to determine what we believe is a full and fair price for the Spire business,” he added.

Why acquire Spire?

Management has previously stated that it believes the acquisition will be transformational for Ramsay’s UK business. It expects the addition of Spire to create a leading private health care services provider, diversify Ramsay UK’s payor sources and case mix, and expand the geographic reach of its capabilities.

Positively, for shareholders and the Ramsay share price, the deal is expected to deliver significant value. This will be driven by benefits of at least 26 million per annum from procurement savings, improved capacity utilisation, and cessation of UK listing costs.

The Ramsay share price is up flat so far in 2021.

The post Ramsay (ASX:RHC) share price lower on UK acquisition update appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Ramsay Health Care Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Strike Energy Ltd (ASX: STX) share price is charging higher on Tuesday morning.

At the time of writing, the oil and gas exploration and development company’s shares are up 3% to 35 cents.

This means the Strike Energy share price is up 20% in 2021.

Why is the Strike Energy share price charging higher?

Investors have been bidding the Strike Energy share price higher on Tuesday after it provided an update on its domestic gas business in the Perth Basin.

According to the release, this business is set for a potential series of transformational results in the second half of the year. Management notes that its multi-well Perth Basin program is targeting ~1,800 PJe of prospective conventional gas resources over the second half of 2021.

In addition to this, this the company is expecting the South Erregulla-1 well to spud in October, using one of the three Ensign 970 rig slots that Strike procured on favourable terms during the industry downturn in mid-2020.

It notes that South Erregulla represents potentially significant near-term multi-trillion cubic feet (TCF) upside for Strike. Furthermore, it has been materially de-risked through the West Erregulla exploration and appraisal campaign. This could bode well for the Strike Energy share price in the future if all goes to plan.

Strike Energy’s Managing Director and CEO, Stuart Nicholls, is very positive on the second half.

He said: “Strike is now set to start this exciting and potentially transformational phase of its Perth Basin gas resource growth strategy. Extending the Permian Gas Fairway down to South Erregulla and reinjecting new value into the Jurassic wet gas play in the South will, on success, have cascading effects across the value of all of Strike’s adjoining acreage in the Basin.”

“At the conclusion of this program, Strike aims to be in a position to support the development of its fertiliser project at Project Haber, which is a key pillar of its Net Zero 2030 target, and to take advantage of the tightening WA domestic gas market conditions expected in the mid part of the decade,” he added.

Based on the current Strike Energy share price, the company now has a market capitalisation of ~$700 million.

The post Strike Energy (ASX:STX) share price charges higher on “transformational” outlook appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Shares in Ramelius Resources Limited (ASX: RMS) are in the spotlight this morning after the company released a full-year production update. The Ramelius share price finished yesterday’s trade at $1.75.

Let’s take a look at how the Western Australia-focused gold producer performed over the financial year just gone.

FY21 production update

Ramelius dug 272,109 ounces of gold out of the ground over the 12 months ended 30 June 2021, setting a new company record.

That number sits comfortably within its previous guidance of between 260,000 and 280,000 ounces for the financial year.

Impressively, Ramelius’ record yearly production came about despite a poor June quarter.

Between 31 March and 30 June, the company produced 61,840 ounces of gold. Its previous production guidance for the quarter was between 65,000 and 70,000 ounces.

Of those 61,840 ounces, 35,208 were mined from the company’s Mt Magnet Gold Mine while the remaining 26,632 were from its Edna May Gold Mine.

According to Ramelius’ announcement, Edna May experienced several minor issues that impacted its production last month.

A shortage of workers and a COVID-19 lockdown limited its ability to ramp up production late in the quarter. Additionally, numerous rainfall events in the region reduced the amount of ore it could haul from its open pit project.

The company expects its all-in sustaining costs (AISC) for the June quarter to remain within its guidance of between $1,280 and $1,330 per ounce of gold produced.

Finally, Ramelius announced it now has $234 million worth of cash and gold in hand – up from $230.6 million at the end of the previous quarter.

It’s also repaid its $8.1 million financial facility and increased its net cash position by $11.5 million over the quarter just gone.

Ramelius Resources share price snapshot

Despite a record-breaking financial year for Ramelius, its share price has been slumping.

It’s fallen 1.9% since the start of 2021. It’s also dropped 12.7% since this time last year.

The company has a market capitalisation of around $1.4 billion, with approximately 814 million shares outstanding.

The post The Ramelius (ASX:RMS) share price is on watch today. Here’s why appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. 

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

Shares of Moderna (NASDAQ: MRNA) rose 27% in June, according to data from S&P Global Market Intelligence. Known for its highly effective COVID-19 mRNA vaccine, Moderna rose in tandem with the spread of the concerning delta variant across the world in June. The company also announced studies showing its vaccine was highly effective against that variant and others, and it locked up more supply agreements with the U.S. and other countries.

So what

Early in the month, Moderna secured a long-term supply agreement with UNICEF to sell the organization 34 million doses in the fourth quarter of 2021, along with up to 466 million doses in 2022. That was followed up by a purchase of 200 million doses, securing supply into the first quarter 2022, and then another 150 million doses purchased by the European Union, bringing its order commitment total to 460 million, including boosters for new variants in 2022.

The new purchase orders by major countries coincided with Moderna’s release of clinical data showing its COVID vaccine as protective against six of the newer variants, including the delta variant causing so much concern. Rival Johnson & Johnson‘s (NYSE: JNJ) vaccine has only shown to be about 60% effective against the delta variant, a lower rate than two-dose vaccines like Moderna’s.

Now what

Even after its June run, Moderna’s stock trades at a bargain valuation of less than 10 times next year’s earnings estimates. That’s because investors see the company’s huge COVID windfall as a one-time occurrence, and that those earnings will decline in 2023 and beyond. But with the delta variant causing worries — and with Moderna’s vaccine perhaps providing superior protection versus the one-dose Johnson & Johnson — investors now might be forecasting a longer life for Moderna’s COVID franchise than it had previously.

Moderna also still isn’t given much credit for its fairly large pipeline of other mRNA indications, since mRNA is only a newly commercialized technology. So despite the stock’s monster run over the past year, any new COVID variants or new mRNA indications from its pipeline could extend the rally even further.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Moderna shares surged 27% in June appeared first on The Motley Fool Australia.

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Billy Duberstein has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Johnson & Johnson and Moderna Inc. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Oil prices surged higher overnight as the crisis within OPEC+ deepened, leaving ASX energy shares to reap the rewards from the mayhem.

News that the oil cartel had called off its meeting last night sent the Brent crude price jumping 1.3% to US$77.16 a barrel to a near three-year high. Its cousin, the WTI benchmark gained 1.4% to US$76.22 per barrel.

What’s more, no new date has been set and the uncertainty has further fuelled the oil price.

ASX energy shares to benefit from OPEC+ crisis

Some of our biggest ASX energy shares are likely to lead the market higher after outperforming the S&P/ASX 200 Index (Index:^AXJO) yesterday.

These include the Woodside Petroleum Limited (ASX: WPL) share price, Santos Ltd (ASX: STO) share price, Oil Search Ltd (ASX: OSH) share price and Beach Energy Ltd (ASX: BPT) share price.

The rift between OPEC’s de facto leader Saudi Arabia and the United Arab Emirates (UAE) appears to have widened.

No resolution in sight for OPEC

These once close allies are refusing to budge from their position in negotiating an extension to production quotas.

The oil price surged because the market was expecting OPEC and non-member Russia (referred collectively as OPEC+) to strike a new deal that would see global oil supply increase to meet rising demand.

But the UAE is the holdout. Its primary gripe appears to be its production baseline. That’s the level which determines how much oil each OPEC+ country can sell.

UAE wants to pump more oil

The UAE wants its baseline to be upped to 3.8 million barrels a day from 3.2 million. It feels that’s justified because it has invested heavily in boosting its production in recent years.

“We cannot extend the agreement or make a new agreement under the same conditions,” CNN quoted the UAE Energy Minister, Suhail Al Mazrouei, as saying. “We have the sovereign right to negotiate that.”

The UAE also seems reluctant to agree to lifting production quotas through to end of 2022. But it’s probably using that as a bargaining chip.

ASX energy shares fuelled by discourse

Unsurprisingly, the other OPEC+ members don’t see to agree with the fairness to adjust its baseline and that means the market won’t see an increase in oil supply in the near-term at least.

Motorists are already feeling the pain at the bowser, and it’s not only here in Australia. Americans who were taking their Fourth of July holiday road trips are paying around 44% more to fill their tanks than a year ago, reported CNN.

Is the oil price set for a painful correction?

But as I explained yesterday, the surge in the oil price may not last – particularly if the UAE carries out its threat to leave the cartel.

The key reason behind the oil price has made a dramatic recovery from its COVID-19 low is because OPEC+ worked together to manage supply.

The UAE is the third biggest oil producer in the bloc. If it leaves OPEC, it could pump as much as it wants at a time when Iran is also eager to resume selling oil to the world.

The post Why ASX energy shares are set to rise again today appeared first on The Motley Fool Australia.

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Motley Fool contributor Brendon Lau owns shares of Santos Ltd. Connect with me on Twitter @brenlau.

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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