Muscat – The Organisation of Petroleum Exporting Countries (OPEC) and its allies are expected to revive more oil supplies when they meet later today. This, as per analysts, underscores the OPEC+ group’s optimism in the outlook for global oil demand in 2022.
The 23-nation OPEC+ group led by Saudi Arabia and Russia is likely to proceed with another modest monthly hike of 400,000 barrels a day as it restores production halted during the pandemic, according to a Bloomberg survey.
Several national delegates also said they expect the boost – due to take effect in February – will go ahead, Bloomberg reported.
According to an OPEC report, the cartel expects global oil demand to further recover in 2022, taking only a ‘mild’ hit from the omicron variant. “The market can take the extra oil, as long as Omicron or a macro downturn don’t crush demand again,” Bob McNally, president of consultant Rapidan Energy Group and a former White House official, told Bloomberg.
Fifteen of 16 analysts and traders surveyed by Bloomberg predicted the output increase will be approved when OPEC+ members meet online on Tuesday.
However, there are still persisting concerns about demand. And proceeding with the next monthly increase is not without risks, the Bloomberg report said.
OPEC estimates that the world oil market is returning to surplus, which will only widen in the coming months as supply jumps from the group’s rivals – including the deployment of emergency reserves by the US and other consumers.
With the excess projected to reach a hefty 2.6mn barrels a day in March, the group may need to reconsider further increases.
“OPEC+ is highly unlikely to drop the ball now and allow inventories to rise significantly,” said Bjarne Schieldrop, chief commodities analyst at SEB AB, as reported by Bloomberg.
The report said OPEC+’s output increase will in any case be tempered as many countries – most notably Angola and Nigeria – struggle to make the production hikes they are allowed because of constrained investment and operational disruptions. As a result, the actual boost in February will likely fall short of the official 400,000 barrels a day, Rapidan’s McNally said.
A Reuters report on Monday said OPEC+ is expected to stick to its plans for a February output increase when it meets today, predicting a mild and short-lived impact on demand from the Omicron coronavirus variant.
Ahead of today’s meeting, the Organisation of Petroleum Exporting Countries held its Joint Technical Committee meeting on Monday via videoconference to review the conditions of the global oil market.
Top oil producers on Monday appointed Kuwaiti oil executive and former diplomat Haitham al Ghais as new secretary general of the OPEC.
‘The conference decided by acclamation to appoint by Haitham al Ghais of Kuwait as secretary general of the Organization, with effect from August1, 2022, for a period of three years,’ the OPEC statement said.
Current OPEC secretary general, Mohammad Barkindo, said, “As another chapter begins with the new year, let us remember with a sense of pride all that we have accomplished to date through our landmark Declaration of Cooperation.”
Barkindo pointed out that the OPEC+ members’ flexible approach has helped provide an added sense of stability, reassurance and continuity to the market and investors despite the ongoing uncertainties.
Referencing OPEC’s Monthly Oil Market Report, Barkindo noted that global oil demand is projected to reach 100.6mn barrels per day in 2022, surpassing pre-pandemic levels.