According to four sources from OPEC+, the organization agreed on Tuesday to continue to its planned increase in oil output for February since it anticipates the Omicron coronavirus type to have a short-term impact on demand.
Since August, the Organization of Petroleum Exporting Countries (OPEC) and its allies, including Russia, have increased their monthly output target by 400,000 barrels per day (bpd).
The US has encouraged the group to produce more petroleum to aid the global economic recovery from the epidemic and to keep prices low, which are now hovering around $80 per barrel. However, the organization claims that the market is balanced and that no additional oil is required.
OPEC+ is unwinding record production cuts of 10 million bpd, which were imposed in 2020, as demand and prices recover from their pandemic-induced slump. Brent crude rose 50% last year and has rallied so far in 2022, trading above $79 on Tuesday.
Current plans would see OPEC+ again raise the target by 400,000 bpd for February, leaving about 3 million bpd in cuts to unwind by September, in line with an agreement last July.
In a technical report seen by Reuters on Sunday, OPEC+ played down the impact on demand from the Omicron variant, saying it would be “mild and short-lived” and was upbeat about economic prospects.
“This is in addition to a steady economic outlook in both the advanced and emerging economies,” the Joint Technical Committee report said.
While OPEC+ has increased its output target each month, actual production has lagged as some members struggle with capacity constraints.
OPEC+ producers missed their targets by 730,000 bpd in October and by 650,000 bpd in November, the International Energy Agency said last month.
