At the end of yesterday’s meeting of the Organization of the Petroleum Exporting Countries and its allies, the United States agreed to pursue a policy of monthly increases in oil production, despite fears that it could run out of crude oil reserves. The corona virus will lead to a new decline in prices. Brent crude fell more than a dollar after the deal was announced, trading below $ 70 a barrel, up from the October high of $ 86. Prices have already recorded the biggest monthly decline in November since the outbreak began.
Under its current contract, OPEC Plus agreed to increase production by 400,000 barrels per month as demand for oil fell due to the epidemic, as part of a gradual reversal of record production cuts agreed by manufacturers in 2020.
The price goes down
Following this arrangement, the deal to add 400,000 barrels a day in January was confirmed by a draft report from “OPEC Plus” and the volume’s sources, which led to prices falling below $ 67 before recovering. Brent crude futures fell $ 1.21 or 1.7 percent to $ 67.66 a barrel at 14:30 GMT, while the US West Texas Intermediate crude futures fell $ 1.24 or 1.8 percent to $ 64.33.
Sources told the meeting before the meeting that market uncertainty had prompted the coalition to consider options such as suspending the planned increase in January or increasing production slightly.
Even before fears about Omicron surfaced, the “OPEC Plus” consortium was examining the effects of last week’s announcement by the United States and other major oil-consuming countries on the withdrawal of crude oil reserves in order to reduce prices.
And OPEC Plus experts told Reuters yesterday that the impact of Omicron is not yet clear, although many countries have begun to impose closures and other restrictions.
Withdrawal from reserves
The White House said yesterday it welcomes OPEC Plus’ decision to increase oil production, but said the United States has no plans to reconsider its decision to withdraw from crude reserves. And U.S. Deputy Secretary of Energy David Dirk said yesterday that President Joe Biden’s administration could change the timing of reserves if prices fall sharply. Last year, OPEC Plus cut production by 10 million barrels a year. Day, equals about ten percent of global distribution. Those cuts have been reduced to about 3.8 million barrels per day.
According to a statement issued by the OPEC Plus Coalition, the meeting will follow the latest “Omicron” mutator’s developments, closely monitoring the market and making immediate changes if necessary. World oil prices have dropped more than $ 10 a barrel since last Thursday, shocking investors with the news of Omicron’s release.
Oil prices fell to a three-week high of $ 86 a barrel in October from about $ 70 a barrel. In November, prices recorded their biggest monthly decline since the onset of the epidemic, due to concerns about supply shortages due to the spread of the Omigron strain.
It was also agreed to hold the twenty-fourth Ministerial Meeting of “OPEC Plus” on January 4, 2022. The “OPEC Plus” meeting agreed to extend the compensation period until the end of June 2022, in response to requests from some countries. The performance was delayed, and the meeting demanded that those countries submit their plans by December 17, 2021.
Participants reiterated the continued commitment of the participating countries to ensure a stable and balanced oil market, and reiterated the key importance of commitment to full production compliance and the compensation mechanism.
The Ministerial Monitoring Committee of the OPEC Plus Coalition began talks yesterday, before a comprehensive ministerial meeting via the Internet at 13.00 GMT.
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