OPEC and allies Omicron to fix oil output amid spike

Analysts say the group is likely to add 400,000 barrels of oil per day in February, in line with the road map adopted since August. The 23-member OPEC+ coalition, led by oil cartel member Saudi Arabia and non-member Russia, meets online every month to decide production levels for the coming month.

US oil prices fell to $65 a barrel in late November after the first reports about the ultra-infectious Omicron variant led to a fall in stocks. But markets have calmed down amid evidence that the variant – while more likely to infect people – may cause less severe disease and that, as data from vehicle traffic and aviation activity show, so far, Omicron is not reducing fuel demand fast enough, said Björner, head of oil markets at Rystad Energy Tonhaugen.

“The impact on actual oil consumption has so far been very limited,” Tonhaugen said. “Now, OPEC appears to be quite comfortable with staying true to its original plan, which is to use the opportunity each month to make a decision to bring it back. 400,000 barrels of production per day for the coming month.”

OPEC+ decided to raise output cautiously at its December meeting, which set output for this month, and reassured panicked markets by saying it would be “very serious” if it became clear that Omicron was having a serious impact. The decision may be reconsidered. It is a move that Tonhaugen described as “a master stroke” and could be repeated at Thursday’s meeting.

Production growth is gradually restoring the deep cuts made in 2020 as demand for motor and aviation fuel has slackened due to the pandemic lockdown and travel restrictions. At times, OPEC+ has not moved fast enough to increase production for US President Joe Biden, who has urged producing countries to open wider taps to deal with rising gas prices.

The US and other oil-consuming countries on November 23 announced a coordinated release of oil from strategic reserves in an effort to control rising energy prices, which have helped fuel inflation and are politically threatening to American drivers. Sensitive gasoline prices have increased. Yet Biden’s move is seen as only a muted effect on prices.

Ahead of Thursday’s meeting, US crude rose 0.5% to $76.49 a barrel, while international benchmark Brent crude also rose 0.5% to $79.36 a barrel.

The recent drop in US gasoline prices — which is heavily influenced by the price of crude — has held steady at the national average of $3.28 a gallon, down from about $3.40 in mid-November.

This story has been published without modification in text from a wire agency feed.