Focused on oil supply in fear of Omicroncovid variants


The oil rig will operate on Friday, September 17, 2021 on the Gaoyouhu platform in Gaoyouhu, Jiangsu Province, eastern China.

Barcroft Media | Getty Images

OPEC and a non-OPEC oil producer, an influential group known as OPEC +, will stick to a previously agreed plan on Thursday to increase production by 400,000 barrels per day in January. Decided.

However, the alliance said in a statement that “the meeting will continue.” This means that if the current market conditions change, you can “make immediate adjustments.”

At the long-awaited meeting, the Energy Alliance was convened via a video conference to decide whether to stick to plans to release more oil to the market or to curb supply in it. Fear of Omicron Covid-19 variant.. For other problems with the table, Release of US-led strategic stockpiles From crude oil importing countries Possibility of re-entry into Iran’s oil market..

Oil recovered its early losses in a post-announced green deal, but some believed it was already priced on the market.

International benchmark Brent Crude oil futures rose 1.1% to $ 69.95 a barrel, US West Texas Intermediate Futures rose 1.3% to $ 66.43 per barrel.

Energy analyst I had high expectations OPEC + is pushing ahead with its current plan to increase monthly production by 400,000 barrels per day. However, some have questioned whether the group could be tempted to pause to evaluate the market after price volatility has increased.

Alex Booth, head of research at Kpler, told CNBC’s “Squawk Box Europe” Thursday that “OPEC + is likely to maintain momentum to release additional oil.”

“Remember, we’re talking about additional oil in January. The December decision is basically already made.”

Saudi Arabia’s Minister of Energy Abdul Aziz bin Salman Al-Saud speaks via videolink at virtual emergency conferences in OPEC and non-OPEC countries after the outbreak of coronavirus disease (COVID-19) in Riyadh, Saudi Arabia on April 9. To do. 2020.

Saudi Press Agency | Reuters

Brent crude futures fell more than $ 10 last Thursday Appearance of Omicron Covid Variant It has become widely known. The World Health Organization says it will take weeks to understand how mutants affect diagnosis, treatment and vaccines.

OPEC + has agreed to add 400,000 barrels a month to global supply to gradually reverse last year’s record cut of about 10 million barrels per day.

OPEC Kingpin Saudi Arabia Shown Russia, a non-OPEC leader, said earlier this week that it does not need to take urgent action in the oil market, but the group is likely to maintain this production policy.

Pressure to increase supply

The OPEC + meeting will be held after heightened tensions over rising oil prices between the United States and the Gulf countries, especially Saudi Arabia.

US President Joe Biden announced on November 23 that he will release oil in a coordinated manner among the United States, India, China, Japan, South Korea and the United Kingdom to cool the market.

Under this plan, the United States will release 50 million barrels from its strategic petroleum reserves. Of that total, 32 million barrels will be replaced in the coming months, and 18 million barrels will accelerate previously approved sales.

Move was prompted after OPEC + Ignore repeatedly US pressure to increase oil supply to stop soaring fuel prices.

Kpler’s Booth said the decision to increase oil production next month would help OPEC + show favor to China and India.

Within the energy alliance, there is also pressure to maintain increased production. “As we know, the UAE is always keen to continue maximizing the rewards of the investments it has made so far. [and] Russia also wants to continue to increase oil production. “

GlobalX research analyst Rohan Reddy told CNBC’s “Street Signs Europe” Thursday that the most likely result of Thursday’s meeting was the decision to maintain an output policy.

“I think the Delta variant was a very good playbook on how you can see things rocking here,” he added. “Therefore, if Omicron and other types of Covid-19 spreads affect, prices could fall to around $ 65 in this range of WTI, or even worse, to the $ 50 range. “

“But I think the most likely result is that this seems to be controlled,” Lady added. “The vaccination program has been deployed so effectively that we can see the price move to $ 75. [to] Range of $ 80 [the first quarter].. And I think the real economic recovery will probably happen after that. “

–CNBC’s Pippa Stevens contributed to the report.

Focused on oil supply in fear of Omicroncovid variants

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