OPEC+ to Retain Current Oil Output as February 2 Meeting Nears

By Adedapo Adesanya

The Organisation of the Petroleum Exporting Countries and its allies (OPEC+) are expected to stick to their plan and ratify another modest production increase next week as they try to satisfy rebounding oil demand when they meet on Wednesday, February 2.

The 23-nation coalition led by Saudi Arabia and Russia will probably authorise a hike of 400,000 barrels a day for March.

The coalition has stuck to its schedule for gradual monthly supply increases since forging the agreement in July 2020.

Whether the cartel will actually be able to add this volume to the market is unclear.

The revival of production halted during the pandemic has started to run into capacity constraints, with many members failing to hit their targets for reasons ranging from lack of investment to militant unrest.

Last month, OPEC+ nations managed only two-thirds of their stipulated increase, according to the group’s data, with Nigeria, Angola and Russia all coming up short.

As world fuel consumption heads back to pre-crisis levels, the struggles of OPEC and its partners have contributed to a rally in prices to a seven-year high just below $90 a barrel in London.

That’s a growing source of pain for consuming nations as escalating fuel bills feed into inflationary pressure and a cost of living crisis afflicting millions around the world.

US President Joe Biden has sought to rein in gasoline prices but to little avail, a potential source of trouble ahead of mid-term elections in November.

The US and other oil-consuming countries on November 23 announced a coordinated release of oil from strategic reserves in an effort to contain rising energy prices that have helped fuel inflation and raised politically sensitive gasoline prices for US drivers.

However, the Biden administration’s move is seen as having only a muted effect on prices.

Oil prices climbed more than 50 per cent last year as many pandemic restrictions eased and as the world learned how to better cope with precautions against the Omicron variant of the coronavirus.

The Omicron variant surge came as the global economy is still in the process of healing: growth has surpassed pre-pandemic levels in the US but is only expected to do so in Europe in the first few months of the year.