The world’s major oil producers decided on Tuesday to maintain their policy of modestly boosting oil output next month as the rapidly spreading Omicron variant has so far not heavily hit demand.
The Organisation of the Petroleum Exporting Countries (OPEC) and their allies, known as OPEC+, has resisted US pressure for a wider opening of the taps in response to high energy prices fuelling a surge in inflation across the world.
The OPEC+ countries drastically slashed output in 2020 as the pandemic wreaked havoc with demand. Last year they decided to step it up again gradually as prices recovered, while reviewing the situation every month.
After a short video-conference meeting on Tuesday, the group said it had agreed to raise output by 400,000 barrels per day in February, the same increase as in previous months.
Since demand has barely been affected by Omicron, “we have to fulfil the obligations OPEC+ has set itself in relation to boosting production, Alexander Novak, Russia’s deputy prime minister responsible for energy policy, told Rossiya 24 TV.
‘Widely Expected’
“The decision was widely expected, and oil prices barely moved on the news,” Caroline Bain, chief commodities economist at Capital Economics, said.
The price of Brent, Europe’s benchmark oil contract, rose slightly to $79.60 on the news of OPEC+’s decision, buoyed by the organisation’s optimistic outlook for demand.
The club’s members had approved a similar rise at their December meeting despite the emergence of Omicron, which had caused prices to fall as markets fretted over the Covid variant’s potential impact on the global economy.
OPEC analysts told the group on Monday that Omicron would have a moderate impact on demand and the rise in price is expected to continue in 2022.
While the new Covid variant is spreading like wildfire around the world, it appears to be far less severe than initially feared, raising hopes that the pandemic could be overcome and life return to a little more normality.
OPEC+’s next meeting has been fixed for February 2, when members will take stock of the fast-moving developments in the pandemic.
- AFP with additional editing by George Russell
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