OPEC+ nations stick to oil output hike plan amid US pressure despite Omicron scare

OPEC and its allies agreed to stick to their existing policy of monthly oil output increases despite the threats posed by the new variant, Omicron of the COVID-19. OPEC and allied oil-producing countries further decided to maintain the amount of oil they release to the world amid the new strain that has spread in a few countries, according to AP. OPEC and its allies have planned to increase the production of 400,000 barrels per day in January.

OPEC+, a group of the Organization of the Petroleum Exporting Countries (OPEC), led by Saudi Arabia, and its allies led by Russia decided to stick with a pre-omicron modest monthly increase in oil releases. According to AP, the fast-mutating variant, Omicron, has resulted in countries imposing travel restrictions in order to control the spread of the deadly virus. Rystad Energy has predicted that Omicron might lead to lockdown which would reduce the oil demand by around 3 million barrels per day in early 2022. 

According to AP, the price of a barrel of US benchmark crude has witnessed a drop due to the spread of the new variant. Reportedly, the price of the barrel was $78 a week ago and it was now at about $66 a barrel on Thursday. Similarly, International benchmark Brent crude witnessed a drop in price from $79 a barrel a week ago to about $69 on Thursday. Reportedly, analysts had stated that the OPEC+ alliance would act cautiously as medical experts have not given a clear view on the new variant that has been reported in a few of the countries across the world. 

Jen Psaki welcomes the decision

Reacting to the decision of OPEC+, White House Press Secretary Jen Psaki welcomed the decision to continue the 400,000 barrels-per-day increase, as per AP report. Psaki further stated that they had no plans to slow releases from strategic reserves. She highlighted that the decision of OPEC+ would help in the facilitation of economic recovery across the world. On 23 November, US President Joe Biden announced that the Department of Energy will make available releases of 50 million barrels of oil from the Strategic Petroleum Reserve to lower prices for Americans and address the demand-supply issue. Furthermore, the White House statement pointed that Biden has been working with countries around the world to address the lack of supply. 

Inputs from AP

Image: AP