Page 11 - FSUOGM Week 49 2021

FSUOGM POLICY FSUOGM

OPEC+ follows through with January

increase, brushing off COVID-19 fears

OPEC RUSSIA and its OPEC+ allies agreed on Decem- or keep the supply offline. Under the current
ber 2 to release a further 400,000 barrels per day plan, the group will release the same amount
There were some (bpd) of oil onto the market in January, banking every month until April 2022, although they will
expectations that on continued robust demand even amid concerns continue holding monthly meetings to discuss
the cartel might hold over a new coronavirus (COVID-19) strain. this policy. The next meeting is scheduled for
back in light of the After months of growth, oil benchmarks have January 4.
emergence of a new declined sharply in recent weeks after the emer- Commenting on OPEC+’s decision, Wood
COVID-19 strain. gence of the new Omicron variant of COVID-19 Mackenzie said: “In a highly uncertain situation,
in South Africa and its subsequent spread across the best option is to stick with the plan. That is
the world. The strain’s discovery led various exactly what OPEC+ has done.”
countries to ban flights from Africa, although “The group’s members are in regular contact
the World Health Organisation (WHO) and and are monitoring the market situation closely,”
other health authorities have cautioned that it Wood Mackenzie continued. “As a result, they
is too soon to say whether Omicron can evade can react swiftly when we start to get a better
vaccines. sense of the scale of the impact the Omicron
It was only weeks ago when US President Joe variant of COVID-19 could have on the global
Biden was urging OPEC+ to produce more oil economy and demand.”
than their quotas, in order to arrest the climb Since falling on news of the Omicron strain,
in fuel costs. The US on November 23 released oil benchmarks have made back some of their
50mn barrels of oil from its strategic reserves in losses, with Brent rising to $72 per barrel on
order to dampen prices – a move that was co-or- December 4. Rystad attributed this growth to the
dinated with China, India, South Korea, Japan market downplaying the threat posed by the new
and the UK. But while the realise did move COVID-19 strain.
prices, the impact was far outstripped by that of “Vaccine news helped pull prices back up but
the new strain. if the market changes its mind and anticipates a
By the time that OPEC+’s monthly meet- worse Omicron impact, which comes on top of
ing arrived on December 2, the question was the severe increase in cases in Europe, price sen-
whether the oil cartel would follow through on timent will sour again,” the Norwegian consul-
its plan to release 400,000 bpd onto the market tancy warned. ™

Week 49 08•December•2021 www. NEWSBASE .com P11