The White House welcomed the decision of OPEC Plus to continue increasing production.
Analysts and sources said that the decision of the “OPEC +” bloc this week to commit to the planned increase in oil production next February reflects the easing of fears of a large surplus of oil in the first quarter, in addition to a desire for consistency in the guidance directed to the market.
The group of producing countries – which includes the Organization of Petroleum Exporting Countries (OPEC) and its allies, led by Russia – decided on Tuesday to increase production by 400,000 barrels per day next February.
The White House welcomed this decision, and a spokesman for the White House National Security Council – who declined to be identified – said that the OPEC Plus decision will support the recovery of the global economy.
“We appreciate the close coordination over the past few weeks with our partners in Saudi Arabia, the UAE and other OPEC Plus producers to help counter price pressures, and we welcome the decision of OPEC Plus to continue increasing production,” he added.
The United States had urged the bloc to pump more crude oil to support the global economic recovery from the pandemic and calm prices, which amounted to about $80 a barrel, but OPEC Plus said that the market does not need more oil.
During the talks, the ministers and officials studied the internal OPEC Plus data, which was seen by Reuters before the meeting on Tuesday, and it indicated an oversupply of 800,000 barrels per day in January, and 1.3 million barrels per day in February.
Although this represents a surplus in excess of demand, it is much lower than the initial estimates that raised concerns. Last December, the internal OPEC Plus figures estimated the surplus in January at two million barrels per day, and it was also estimated that it would increase to 3 million barrels in Today next February.
“The picture has improved since the previous decision,” a delegate who participated in the OPEC Plus meeting said, referring to expectations for the first quarter of the year, and added, “stocks decreased.”
Other delegates said that the adjustments were due, in part, to the OPEC Plus assessment that the mutated Omicron from the Corona virus would have a limited impact on demand, and that the inability of some producers to increase production due to factors limiting production capacity would keep the actual increase in supplies low, and it appears that investors They agree that the Omicron effect is simple.
Oil prices rose to $80 a barrel to almost return to the level they were on last November 26, when news began to spread about the emergence of the new mutagen, which led to a drop in prices on the same day by more than 10%.
Russian Deputy Prime Minister Alexander Novak spoke yesterday, Tuesday, after the OPEC Plus decision, and said – by phone to “Russia 24” TV channel – that the bloc believes that there is uncertainty at the present time regarding the spread of Omicron.
He continued, “However, observations and analysis show that despite the high level of infection spread, hospital admission rates are low enough, and this has no effect on the decline in demand.”
Analyst Barbara Lambrecht – from “Commerzbank” – warned that sentiment could shift quickly, noting the possibility that Omicron could lead to tighter restrictions on movement. But, she added, “everything seems to be going smoothly for OPEC Plus at the moment.”
OPEC Plus sources said that the bloc is also keen to adhere to its previous market guidance, a point that the head of the Moscow delegation, Novak, focused on at the OPEC Plus meeting last December.