OPEC and its allies strike deal to keep ramping up oil production – .

OPEC and its allies strike deal to keep ramping up oil production – .

Saudi Arabia and its Opec + alliance allies agreed to continue ramping up monthly crude production, offering a victory for consumer governments, including the United States, which had called on the group to help lower prices.

Oil prices initially fell on the announcement, which surprised a market that expected the group of major producers to curb supply, fearing that the spread of the Omicron coronavirus variant could affects global demand for oil. The international benchmark Brent fell 1% Thursday to around $ 68 a barrel, before rebounding above $ 69.

The Opec + group, which includes members of Opec and other producers like Russia, said it would increase supply in January by 400,000 barrels per day as previously planned. However, in an unusual move, he said the meeting would remain “in session,” suggesting that Saudi Arabia, Russia and other big producers could step in quickly to support prices if needed.

Opec + “will continue to monitor the market closely and make immediate adjustments if necessary,” he said.

The Opec + move comes after weeks of pressure from the White House, which called on the group to increase supply to cool prices which have risen sharply over the past year and fueled fears of inflation widespread in the United States. President Joe Biden announced the largest release of oil from US emergency stocks last month in an attempt to lower prices that had little immediate impact.

Then at the end of last week, fears about the possible impact of the Omicron variant on the global economy led to a sudden and steep drop in oil prices, sparking speculation that Opec + would completely stop increases in oil prices. monthly production.

Analysts said Saudi Arabia’s decision not to intervene to stop the price drop suggested geopolitical concerns had been a factor.

“There were broader issues at stake at this Opec + meeting and not just Omicron,” said Amrita Sen, director of research at consultancy Energy Aspects.

OPEC’s own forecast calls for a dramatic increase in oil stocks, she said, “so not suspending production suggests a political angle.”

Improving relations between Biden’s White House and Saudi leadership could be part of the kingdom’s drive to continue ramping up production, people familiar with recent diplomatic talks said.

“Although unexpected by the market, [the] OPEC + decision. . . is hardly a policy error, ”said Bob McNally, head of the Rapidan Energy Group and former White House adviser to George W Bush.

The decision “reflects the novelty and the enormous uncertainties created by the [strategic petroleum reserve] and Omicron, the need to restock inventory early next year and the desire to reduce the escalation with President Biden, ”McNally said.

West Texas Intermediate, the benchmark for US oil, also fell after the announcement before recovering on Thursday. It was recently trading below $ 66 a barrel, down 16% from the middle of last week.

Opec + has increased total oil production every month since August as it gradually replaces huge supply swathes it slashed as the pandemic shattered oil prices last year.

Until the detection of the Omicron variant last week, the group had come under increasing pressure to speed up this process amid warnings of a growing deficit between supply and demand.

“The sudden emergence of a potentially new and more dangerous variant adds to further blockages in parts of Europe aimed at reversing a dramatic outbreak of infections, especially in unvaccinated populations,” Diamantino said Azevedo, Angolan Minister of Mineral Resources and Petroleum, at the press conference. opening session of the OPEC meeting on Wednesday.

“In these uncertain times, it is imperative that [Opec and its allies] remain cautious in our approach and ready to be proactive if market conditions warrant. “

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