By Adedapo Adesanya
Crude oil prices returned to the bullish territory on Thursday as the Organisation of the Petroleum Exporting Countries and allies (OPEC+) announced that it was sticking to its plan to ease the production cuts in January by 400,000 barrels per day, despite the current challenges in the market.
Brent crude rose 16 cents or 0.23 per cent to settle at $69.83 per barrel while the West Texas Intermediate (WTI) crude climbed to $66.74 per barrel after rising by 24 cents or 0.36 per cent.
At the meeting of the alliance on Thursday, the ministers decided to keep the policy to add 400,000 barrels per day to the market each month, as they have been doing since August.
All ministers of the OPEC+ group appeared to be in agreement with increasing output by another 400,000 barrels per day next month—that is, rolling over the current supply addition policy.
Before the full OPEC+ ministerial meeting, the Joint Ministerial Monitoring Committee (JMMC) held a meeting, which ended with the panel not issuing any recommendation for OPEC+ production in January.
Shortly before the JMMC meeting began, reports emerged that the OPEC+ group could discuss adding just 200,000 barrels per day in January instead of 400,000 barrels per day even as there was mounting evidence of a larger-than-expected oil surplus early next year.
Market analysts expected the alliance to pause the cuts, considering the expected oversupply, a potential impact of the Omicron variant, and the Strategic Petroleum Reserves (SPR) releases from several nations led by the United States.
However, OPEC+ leaders – Saudi Arabia and Russia had already signalled that the new variant which is still under research shouldn’t be a reason to jump to hasty decisions.
The next scheduled meeting of OPEC+ is set for January 4, 2022.
One of OPEC+’s largest critics, the US said it welcomed the decision, but added that the country had no plans to reconsider its decision to release crude reserves.
Recall that on November 23, the US coordinated release of oil among itself, India, China, Japan, South Korea and the United Kingdom to help cool the market.
Support also came when the American president, Mr Joe Biden said his administration’s plan to tackle COVID-19 does not include shutdowns, but added that experts believe that cases will continue to rise especially in the winter season.
In Europe, the situation’s outlook is dire with authorities saying that the variant could be responsible for more than half of all COVID-19 infections in Europe within a few months.