The Organisation of Petroleum Exporting Countries (OPEC) and its allies OPEC+ expects the impact on the oil market from the Omicron coronavirus variant to be mild and temporary, keeping the door open for a further increase in output.
The Joint Technical Committee of OPEC+ said: “The impact of the new Omicron variant is expected to be mild and short-lived, as the world becomes better equipped to manage COVID-19 and its related challenges.
“This is in addition to a steady economic outlook in both the advanced and emerging economies,” it added.
OPEC met on Monday to discuss the appointment of a new secretary general to succeed Nigeria’s Mohammad Barkindo and to discuss market fundamentals.
But this will be followed by a meeting of OPEC and allies led by Russia, known as OPEC+, on today, to debate whether to go ahead with raising output targets by 400,000 barrels per day (bpd) in February.
In the report’s base scenario, OECD commercial oil stocks in 2022 will remain below the 2015-2019 average in the first three quarters, and rising above that average by 24 million barrels in the fourth quarter.
The scenario assumes 40 million barrels are released from strategic petroleum reserves in the first half of the year, and that 13.3 million barrels are returned to the US strategic reserve in the third quarter.
The report kept forecasts for the growth in oil demand in 2021 and 2022 unchanged at 5.7 million bpd and 4.2 million bpd respectively.
The alliance at its last meeting on December 2 stuck to the plan for a 400,000 barrels per day rise in January despite fears that a US release from crude reserves and Omicron would lead to an oil-price rout.
While a Russian oil source and two other OPEC+ sources confirmed that no changes to the deal were expected, Saudi Arabia’s King Abdulaziz Salman said the OPEC+ production agreement was needed for oil market stability and that producers must comply with the pact.
Iraq, on its part, said it would support sticking to existing OPEC+ policies to raise output by a combined 400,000 barrels per day in February. Nigeria, an active OPEC member has always aligned with the decision of the majority.