OPEC+ Set To Maintain Oil Supply Increase Strategy

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OPEC+ Set To Maintain Oil Supply Increase Strategy
OPEC+ Set To Maintain Oil Supply Increase Strategy

OPEC and its partners decided on Tuesday to keep their strategy of moderately increasing oil supply next month, despite the fact that the fast-spreading Omicron strain has not yet had a significant impact on demand.

The OPEC+ group, which includes major producers Saudi Arabia and Russia, has resisted US efforts to open the taps wider in reaction to rising oil costs, which have fueled a global inflation spike.

As the pandemic caused havoc on demand, the Organization of Petroleum Exporting Countries (OPEC) and its ten partners substantially reduced output in 2020.

Last year, they planned to gradually increase it when prices rebounded, while keeping a monthly eye on the situation.

The organization said on Tuesday that it had decided to increase output by 400,000 barrels per day in February, the same as in prior months, following a short videoconference meeting.

Despite the introduction of Omicron, which caused prices to tumble as markets worried about its possible influence on the world economy, the club’s members accepted a prior raise at their December meeting.

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The White House praised the December decision, which was made in response to concerns about the impact of rising gasoline prices in the United States, but it did not prevent oil prices from rebounding much from their prior lows.

Brent, Europe’s benchmark oil contract, touched $79.76 at 1325 GMT on Tuesday, up 15% from the day before the group’s summit on December 2.

On Monday, OPEC experts warned the group that Omicron would have a minimal effect on demand and that the price rise would continue in 2022.

While the new Covid variant is spreading like wildfire over the world, it looks to be considerably less severe than previously anticipated, encouraging hopes that the pandemic may be contained and life can return to normal.

‘A sense of stability’ OPEC Secretary-General Mohammed Barkindo stressed the need to “remain highly nimble and adaptable to the constantly changing situation” in remarks on Monday.

He said that the group’s “flexible approach has helped provide an added sense of stability, reassurance and continuity to the market and investors”.

On Monday, OPEC selected Haitham al-Ghais, a Kuwaiti oil businessman, to succeed Barkindo on August 1.

Al-Ghais is a deputy managing director of the Kuwait Petroleum Corporation and was Kuwait’s OPEC governor from 2017 until June 2021. (KPC).

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