As OPEC+ Plans to Review Supply, Oil Prices Climbs

On Friday, the 3rd December 2021, oil prices rose as OPEC+ said it would review supply additions ahead of its next scheduled meeting. The meeting arises as OPEC+ fears the Omicron variant could decrease demand as efforts are made to stabilize supply.

Brent Crude futures rose by 1.9%, to $71.01 a barrel by 07:52 GMT, while the  U.S. West Texas Intermediate (WTI) crude futures rose 2.1%, to $67.88 a barrel.

The Organization of the Petroleum Exporting Countries, Russia and allies, together called OPEC+, surprised the market on Thursday when it stuck to plans to add 400,000 barrels per day (bpd) supply in January.

An analyst a Oando Jeffrey Halley stated “Unless we get a major Omicron escalation, this week’s lows for Brent and WTI likely represent the lows for the medium-term,” 

However, the producers left the door open to changing policy swiftly if demand suffered from measures to contain the spread of the Omicron coronavirus variant. They said they could meet again before their next scheduled meeting on Jan. 4, if needed.

Analyst Ann-Louise Hittle supported OPEC+ effort to stick with their policy for now, given it was still unclear how mild or severe Omicron turns out to be compared with previous variants.

“The group’s members are in regular contact and are monitoring the market situation closely,” Hittle said in emailed comments.

“As a result, they can react swiftly when we start to get a better sense of the scale of the impact the Omicron variant of COVID-19 could have on the global economy and demand.”

The market has been roiled all week by the emergence of Omicron and speculation that it could spark new lockdowns, dent fuel demand and spur OPEC+ to put its output increases on hold.

Concurrently, Brent was estimated to end down about 2.4%, while WTI was on track for a 0.4% drop, with both heading lower for a sixth straight week for the first time since November 2018.