OPEC + agrees to move forward with oil production hike expected in January – .

OPEC + agrees to move forward with oil production hike expected in January – .

  • OPEC + agrees to add an additional 400,000 bpd in January
  • Oil prices fell from three-year October highs
  • Omicron, the release of US reserves puts pressure on prices
  • US wants OPEC to pump more as Biden ratings suffer

LONDON, Dec. 2 (Reuters) – OPEC and its allies agreed on Thursday to stick to their current policy of monthly increases in oil production despite fears that a US release of crude reserves and new variant of the coronavirus causes a further rout in oil prices.

Brent fell more than $ 1 after the deal was released, trading below $ 70 a barrel, a far cry from October’s three-year highs above $ 86. Prices in November had already recorded their biggest monthly drop since the start of the pandemic.

As part of its existing pact, OPEC + agreed to increase production by 400,000 bpd each month, ending the record cuts agreed to in 2020 when demand collapsed due to the pandemic.

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The agreement to stick to that pact and add 400,000 bpd in January, confirmed by a draft statement from OPEC + and OPEC + sources, has caused prices to drop below 67 $ before they regain ground.

The Organization of the Petroleum Exporting Countries and its allies, known as OPEC +, have resisted US demands for faster increases in oil production to help the global economy, fearing that oversupply could hurt to a fragile recovery in the energy sector.

Washington has repeatedly called on OPEC to pump more as gasoline prices in the United States skyrocket and approval ratings for President Joe Biden plummet.

Ahead of the meeting, sources said market uncertainties prompted the group to consider options such as suspending the increase scheduled for January or increasing production by a smaller amount.

Even before concerns about Omicron emerged, OPEC + had weighed the effects of last week’s announcement by the United States and other major consumers that they would release emergency crude reserves to moderate. energy prices.

Any decision to increase production to less than 400,000 bpd in January or even to cut supplies would have put OPEC in the middle of a confrontation with Washington amid already lukewarm relations between the United States and the leader of the United States. ‘OPEC, Saudi Arabia.

OPEC + experts said in a report seen by Reuters on Wednesday that Omicron’s impact was not yet clear, even as many countries introduced lockdowns and other restrictions.

The Biden administration could still adjust the timing of any reserve release if prices drop significantly, US Assistant Secretary of Energy David Turk said on Wednesday. Read more

Last year, OPEC + achieved record production cuts of 10 million barrels per day, equivalent to about 10% of global supply. This has since been reduced to around 3.8 million barrels per day.

However, OPEC + has consistently failed to meet its production targets, producing around 700,000 bpd less than expected in September and October, according to the International Energy Agency (IEA). Read more

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Additional reporting by Vladimir Soldatkin; Written by Dmitry Zhdannikov; Editing by David Goodman and Edmund Blair

Our Standards: Thomson Reuters Trust Principles.


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