By Adedapo Adesanya
Oil prices rose on Monday, rebounding from recent losses on reports that the Organisation of the Petroleum Exporting Countries and allies (OPEC+) could adjust plans to raise production.
The Brent crude added 74 cents or 0.94 per cent yesterday to trade at $79.63 per barrel, while the West Texas Intermediate (WTI) rose 69 cents or 0.91 per cent to sell at $78.03 per barrel.
The OPEC+ may alter plans to keep boosting production to counter plans by large consuming countries to release crude from their reserves or if the coronavirus pandemic dampens demand.
The market had been dampened by plans by countries like the US, Japan, and India to release from the crude oil reserves to counter rising prices taking a toll on their economies.
US President Joe Biden was reported to be preparing to announce the release of oil from the nation’s Strategic Petroleum Reserve (SPR) in concert with several other countries as soon as Tuesday.
Japanese and Indian officials are now working on ways to release national reserves of crude oil in tandem with the world’s largest oil producer and other major economies to dampen prices.
Although Japanese laws prohibit the release of oil from the reserve except in a situation of a shortage or a natural disaster, the government is looking for a loophole in the law.
Last week, President Biden approached China, Japan, South Korea, and India with the suggestion to all release oil from their strategic reserves with China already planning to do this.
Initially, India rejected the idea on the grounds it would not do much good, even though the country is among the most dependent on imported oil while South Korea also seemed reluctant to tap its strategic reserves.
Now with the plans to release the oil, analysts note that the combined SPR release could be 100 million to 120 million barrels or even higher.
Also adding to the bearish outlook for the market is the worry that demand might be affected by the prospect of national lockdowns in Europe.
Austria entered its fourth national lockdown on Monday as Europe again becomes the epicentre of the coronavirus pandemic.
Its neighbour, Germany could also impose fresh curbs, with politicians debating a lockdown for unvaccinated people.
In addition, The US Dollar traded close to a 16-month high against the Euro on Monday, making dollar-priced crude more expensive for buyers with other currencies.
