OPEC + weighs production policy amid falling oil prices, Omicron fears – .

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OPEC + weighs production policy amid falling oil prices, Omicron fears – .


  • The policy will be decided by OPEC + on Thursday
  • Oil prices fell from three-year October highs
  • Omicron and the release of US reserves to guide OPEC’s decision
  • Washington is pressuring OPEC to pump more

LONDON / MOSCOW, December 1 (Reuters) – OPEC and its allies will decide on Thursday whether to release more oil into the market or restrict supply amid sharp swings in crude prices, a U.S. release of oil reserves. oil and fears about the new variant of the Omicron coronavirus.

Oil prices fell to nearly $ 70 a barrel on Tuesday, from three-year highs above $ 86 in October. Prices posted their biggest monthly drop in November since the start of the pandemic, with the new variant raising fears of glut.

The benchmark Brent index was trading around $ 72 on Wednesday.

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OPEC and its allies disagree with the United States, which has called on the group to increase production to help the global economy. The producers said they did not want to hamper a fragile recovery of the energy industry with a new glut.

“In these uncertain times, it is imperative that we – along with non-OPEC countries… – remain cautious in our approach and ready to be proactive if market conditions warrant,” said Diamantino Pedro Azevedo, Angolan Minister of Energy and rotating president of OPEC. , said in an opening speech to OPEC.

Wednesday’s meeting of ministers of the Organization of the Petroleum Exporting Countries ended without any recommendations on production policy, three OPEC sources said.

On Thursday, the OPEC + alliance, which includes Russia and other producers, will likely make a political decision.

Russia and Saudi Arabia, the biggest producers of OPEC +, said ahead of this week’s meetings that there was no need for a knee-jerk reaction to change policy. Iraq has said OPEC + must extend the existing production policy in the short term. Read more

CUT IMPACT

Since August, the group has added an additional 400,000 barrels per day (bpd) to global supply, as it gradually reverses record cuts agreed to in 2020, when demand crunched due to the pandemic.

“Generally, the impact of Omicron appears to be jet fuel related at the moment, especially in Africa and Europe,” OPEC + said in a report ahead of the meeting.

Many countries have banned travelers from southern Africa and some European states have imposed new restrictions on coronaviruses.

“The demand for fuel for transport in Europe could also be affected,” the report said, adding that more data on the severity of the Omicron will be available in two weeks.

Goldman Sachs said the drop in oil prices had been excessive, with the market now accounting for a seven million bpd impact on demand. Rystad Energy said another wave of lockdowns could result in a demand loss of three million bpd in the first quarter.

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

OPEC + projects a surplus of three million bpd in the first quarter of 2022 after the release of reserves, compared to 2.3 million bpd previously.

Reuters Charts

But the report says the impact of the release would be mitigated as some countries made it voluntary and the duration was uncertain.

The Biden administration could adjust the timing of the release if prices drop significantly, U.S. Deputy Energy Secretary David Turk told Reuters on Wednesday. Read more

OPEC + has gradually reduced last year’s record production cuts of 10 million bpd, equivalent to around 10% of global supply. About 3.8 million bpd of cuts are still in place.

But OPEC’s oil production in November again surpassed expected levels as some OPEC producers struggled to ramp up production. Read more

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Additional reporting by Olesya Astakhova Writing by Dmitry Zhdannikov and Ahmad Ghaddar Editing by Edmund Blair and Alistair Bell

Our Standards: Thomson Reuters Trust Principles.

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