OPEC and allies agree to a marginal increase in oil production

OPEC and its allies have decided to moderately boost oil production

OPEC and its allies on Tuesday decided to maintain their policy of marginally raising oil output next month as the fast-spreading Omicron variant has not affected demand much so far.

The OPEC+ group, including top producers Saudi Arabia and Russia, have resisted US pressure for a wider opening of the tap in response to higher energy prices fueling a rise in inflation around the world.

13 members of the Organization of the Petroleum Exporting Countries (OPEC) and 10 of their allies cut production drastically in 2020 as the pandemic hit demand.

Last year, he decided to raise it again gradually with the prices improving, reviewing the situation every month.

After a short videoconference meeting on Tuesday, the group said it had agreed to increase production by 400,000 barrels per day in February, at the same level as in previous months.

Club members approved the previous hike at their December meeting despite the emergence of Omicron, which caused prices to fall as markets were concerned about its potential impact on the global economy.

The December decision earned itself thanks to the White House panicked by the impact of rising prices at US petrol stations, but it didn’t stop crude prices from recovering substantially from their previous slump.

The price of Brent, Europe’s benchmark oil contract, climbed to $79.76 at 1325 GMT on Tuesday – 15 percent higher than before the group’s December 2 meeting.

OPEC analysts told the group on Monday that Omicron will have a moderate impact on demand and expect prices to continue rising in 2022.

While the new COVID version is spreading like wildfire across the world, it appears to be much less severe than initially feared, with hopes that the pandemic can be overcome and life can return to a bit more normalcy.

‘sense of stability’

OPEC Secretary-General Mohamed Barkindo in his remarks on Monday stressed the need to “remain highly agile and adaptable to the ever-changing situation”.

He added that the group’s “flexible approach has helped provide an added sense of stability, assurance and continuity to the market and investors”.

OPEC on Monday named Kuwaiti oil executive Haitham al-Ghis to replace Barkindo on August 1.

Al-Ghais, who was the OPEC governor of Kuwait from 2017 to June 2021, is the deputy managing director of Kuwait Petroleum Corporation (KPC).

Iran export

While OPEC+ countries have been gradually increasing production again since last year, analysts say some countries such as Nigeria and Angola are struggling to ramp up production.

“The important point here is that Russia did not ramp up production in December, which could be a sign that they are approaching their potential,” said SEB chief commodities analyst Bjarne Schildrop.

Another heavyweight, Iran has seen its exports limited by US sanctions.

Negotiations to revive a deal that curbed Iran’s nuclear activities in exchange for sanctions relief are underway in Vienna.

They have dragged on since last year but negotiators are pushing for an end to talks to get the historic 2015 agreement back on track.

It was thrown into disarray in 2018 when the US withdrew from the agreement.

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