OPEC + should stick to existing production policy at Jan. 4 meeting, sources say
OPEC and its allies are likely to stick to their current policy of modest monthly increases in oil production at a meeting next week, four sources said, as demand concerns raised by the variant of the Omicron coronavirus are easing and oil prices are recovering.
The Organization of the Petroleum Exporting Countries and its allies, known as OPEC +, is expected to decide on January 4 whether to proceed with a production increase of 400,000 barrels per day for February, the latest of a regular outcome of the record cuts made last year.
“So far, I have not heard of any initiative to change course,” said an OPEC + source. A Russian oil source and two other OPEC + sources also said no changes to the deal were expected next week.
At its last meeting on December 2, OPEC + stuck to the plan for a 400,000 bpd hike in January, despite fears that a U.S. release of crude and Omicron reserves could lead to a oil price rout.
The price of benchmark oil fell more than 10% on Nov. 26 to $ 72 a barrel when reports of the new variant first surfaced, but it has since returned to nearly $ 80 and sources from the ‘OPEC + said December’s decision to increase supply was correct.
“Great result,” a separate OPEC + source said of the market rally since the last meeting.
Russian Deputy Prime Minister Alexander Novak said on Wednesday that OPEC + had resisted calls from Washington to increase production further because it wanted to provide the market with clear direction and not stray from policy.
The United States has repeatedly pushed OPEC + to accelerate production increases as gasoline prices in the United States soared and approval ratings for President Joe Biden plummeted. Facing resistance, Washington said in November that it and other consumers would release reservations.
Novak also said on Wednesday that the possible release of strategic stocks would have a limited short-term impact on the market.
OPEC ministers are also expected to discuss who will become the group’s new secretary general to replace Mohammad Barkindo, whose departure is scheduled for late July. Kuwait’s candidate for the post enjoys broad support, sources said.
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