Record domestic fuel prices are expected to rise further as crude oil shot past $77 a barrel on Tuesday after OPEC+, the producers’ cartel, failed to reach an agreement over increasing supplies.

Oil prices have gained $27 a barrel, or 54%, since the beginning of 2021 as global demand is gaining pace following wider vaccination while supply has been artificially curbed by OPEC+, a grouping of 23 oil-producing countries led by Saudi Arabia and Russia.

OPEC+, which controls about half the global output, has been adding supply since May, which the markets have apparently found inadequate, resulting in a $10 per barrel rise in oil prices. Analysts have predicted even higher prices in the future while consuming countries have demanded OPEC+ ease supply curbs.

To respond to the tightening market conditions, the producers’ grouping last week chalked out a plan to raise supplies by 400,000 barrels per day (bpd) per month from August to December. This, however, ran into trouble with the UAE, a key cartel member, asking for a bigger quota for itself that would allow it to produce an additional 6,72,000 bpd over and above its share of the proposed 2 million bpd by the group by December.

The UAE’s demand has been opposed by Saudi Arabia, the kingpin of OPEC,, on the grounds that it would trigger similar demands by other countries, wrecking the balance in the commodity market.

Disagreement means oil prices may further rise in the short term. Higher prices and rising demand may also act as an incentive for countries to cheat on their agreed production quota that can weaken the cartel.

Higher prices would translate into increased inflation for India as it imports 85% of its oil requirement. Domestic fuel prices are aligned with international rates and have been at record-high for months due to higher oil prices, steep taxes and expanding fuel marketing margins of state oil companies.