Business

OPEC+ starts two days meetings amid price slide

Written by The Frontier Post

LONDON (Reuters): OPEC and its allies began two days of meetings on Wednesday to decide whether to release more oil into the market or restrain supply amid big gyrations in crude prices and fears about weaker energy dem-and because of the Omicron coronavirus variant.
Oil prices tumbled to near $70 a barrel on Tuesday, down from three-year highs above $86 in October. Prices posted their biggest monthly decline in November since the start of the pandemic, as the new variant raised fears of a glut. Benchmark Brent was trading around $71 on Wednesday. Ministers from the Orga-nization of the Petroleum Exporting Countries began Wednesday’s talks at 1315 GMT. That will be followed on Thursday by a meeting of ministers from the broader OPEC+ alliance, which includes OPEC, Russia and others.
Shortly after the OPEC talks began, a delegate told Reuters that the group was not discussing changes to output policy for now.
Russia and Saudi Arabia, the biggest OPEC+ producers, had said ahead of this week’s meetings that there was no need for a knee-jerk reaction to amend policy.
Iraqi oil minister Ihsan Abdul Jabbar said he expected OPEC+ to extend existing output policy in the short term, Iraq’s state news agency reported.
Since August, the group has been adding an additional 400,000 barrels per day (bpd) of output to global supply, as it gradually winds down record cuts agreed in 2020, when demand cratered because of the pandemic.
“The threat to oil demand is genuine,” said Louise Dickson, senior oil markets analyst at Rystad Energy.
“Another wave of lockdowns could result in up to 3 million bpd of oil demand lost in the first quarter of 2022.”
Even before concerns about Omicron emerged, OPEC+ had been weighing the effects of last week’s announcement by the US and other major consumers to release emergency crude reserves to temper energy prices.

About the author

The Frontier Post