Oil Prices Increase by Over 2% as OPEC+ Meeting Looms

On Wednesday the 1^st December 2021, Oil prices rose by over 2% as a result of Omicron, a variant of the Covid-19 virus. Thus, crucial stakeholders are set to review strategies on how to respond to the demand threat which could arise in the oil market.

The brent and U.S. West Texas Intermediate futures rose by $1.90 (2.7% increase) and $1.71(2.6% increase) respectively.

A meeting of the Organization of the Petroleum Exporting Countries (OPEC+) groups  with allies including Russia are set to hold on Thursday to discuss the market turbulence and supply reaction.

Reports suggests that a number of OPEC+ ministers are hesitant  on reformatting existing plans. However, oil market analysts anticipates OPEC+ to halt the 400,000 barrels per day additional supply in January as a result of potential demand shock from the spread of the Omicron variant.

Head of commodities retail business Kotak Securities, Sunil Katke, “Since (the) U.S. and other countries agreed on releasing emergency stocks to control the price rise… also since the prices have already corrected from $85 a barrel to close to $70, OPEC+ may revisit their strategy,”

“There is a possibility of that happening, considering the new coronavirus variant and its impact on global demand, especially in the aviation sector.”

Data from the American Petroleum Institute the United States of America crude stock declined by 747,000 barrels per day by November 26. If OPEC+ agrees to initiate the planned supply increase in January, producers might not complement supply aggregate.