The Organisation of Petroleum Exporting Countries (OPEC) and allied nations have decided to continue with gradual oil production increases. The countries, collectively known as OPEC+, plans to increase production by 400,000 barrels per day (bpd) in February.
The group started their 36th meeting in Vienna, Austria on Tuesday and concluded talks within two hours. Internal figures seen by Reuters suggest that the group originally expected a two million bpd supply surplus in January, increasing to three million bpd in February. However, new predictions suggest an 800,000 bpd supply surplus in January, followed by a 1.3 million bpd surplus in February. While smaller than expected, these surpluses make increasing production without devaluing oil prices difficult.
Reduced economic activity following the emergence of the Omicron Covid-19 variant had cast doubt over planned production increases. However, the relatively small number of new travel restrictions imposed across the world has caused OPEC to believe the consequences for fuel consumption will be small.
In its monthly oil market report OPEC projected that oil demand would reach 100.6 million bpd in 2022. This would sit roughly equal to pre-pandemic oil demand at approximately 100 million bpd.
OPEC secretary general Mohammad Sanusi Barkindo said the group needed to “remain highly nimble and adaptable to the constantly changing situation”.
Rising international fuel prices have caused countries, including the US, to encourage the group to increase production. Crude oil traded around or above $80 per barrel in October and November, and currently sits around $76 per barrel.
In November, the US announced an international effort to release oil from stockpiles from January. This aimed to drive down prices, which have since fallen and begun a new continuous rise.
Over the past year, large oil consumers such as the US, India, and Japan have urged OPEC to produce more oil than its planned increases. So far, the group has continued with its plans.