OPEC, allies stick to modest output boost despite omicron

Dec 2, 2021, 2:13 AM | Updated: Dec 3, 2021, 1:57 pm

NEW YORK (AP) — OPEC and allied oil-producing countries decided Thursday to stick to their plans to boost oil production even as the new omicron variant cast a shadow of uncertainty over the global economic recovery from the coronavirus pandemic.

Officials from OPEC countries, led by Saudi Arabia, and their allies, led by Russia, voted to deliver steady, modest monthly increases in oil releases — a pace that frustrated the United States and other oil-consuming nations as gasoline prices have risen.

The OPEC+ alliance approved an increase in production of 400,000 barrels per day for the month of January.

The fast-mutating variant led countries to impose travel restrictions when it emerged late last week. In a worst-case scenario, lockdowns triggered by omicron could cut oil demand by nearly 3 million barrels per day in early 2022, according to projections by Rystad Energy.

Positive news about drugs to treat the variant or the vaccines’ effectiveness against it could improve that outlook. But even with positive news, a decrease in oil demand is likely because “the distribution of these remedies may not actually reach all markets with extreme immediacy, which would still necessitate the lockdowns in much of the developing world,” said Louise Dickson, senior oil markets analyst for Rystad.

The price of a barrel of U.S. benchmark crude fell with news of the variant. It was about $78 a barrel a week ago and was trading at about $67 a barrel Thursday. International benchmark Brent crude followed a similar path, falling from $79 a barrel a week ago to about $70 on Thursday.

The decision by OPEC+ to stay the course sends a signal that “the group does what it says and that they will continue their policy on their own terms,” Dickson said. “It also really signals that OPEC+ needs a bit more time to really dig into the numbers on the omicron variant.”

Saudi Energy Minister Abdulaziz bin Salman earlier this week played down any impact the little-understood variant would have on oil demand, telling the kingdom’s Asharq al-Awsat newspaper: “We are not worried.”

But OPEC ministers briefly postponed one of their meetings this week, hoping for more insight into whether the variant is likely to push the world back toward pandemic lockdowns or leave markets relatively unscathed.

Some analysts had predicted that the OPEC+ alliance would act cautiously Thursday, pending more clarity from medical experts on the new variant.

Before omicron’s appearance, the OPEC+ meeting had been shaping up as a potentially fraught moment in a growing dispute between oil-supplying nations and oil-consuming ones, as the global economy rebounds from the worst of the pandemic downturn and demand for oil surged.

Angering the U.S. and its allies, OPEC+ has stuck to a plan to open the petroleum taps bit by bit — even as oil prices surged to seven-year highs — until deep production cuts made during the depths of the pandemic are restored.

With rising gas prices putting him under political pressure at home, President Joe Biden last week responded to OPEC’s refusal to increase supplies more quickly by announcing the U.S. and other nations would release tens of millions of barrels of oil from their strategic reserves, boosting supplies and temporarily lowering prices. But gasoline prices in the U.S. barely moved.

And then, omicron’s emergence unsettled those dynamics.

White House press secretary Jen Psaki said Thursday that there are no plans to slow releases from strategic reserves, despite the advent of the variant and OPEC’s decision.

“We welcome the decision today to continue the 400,000 barrels-per-day increase,” Psaki said. “Together with our coordinated release from the SPR, we believe this should help facilitate the global economic recovery.”

Biden sent senior energy adviser Amos Hochstein to the United Arab Emirates and Saudi Arabia this week to soothe relations, address energy prices and talk about working together in transitioning to cleaner energy. Hochstein met with the Saudi energy minister Tuesday.

“It’s unclear whether the U.S. will become more active, using its SPR to control prices,” said Paul Sheldon, chief geopolitical advisor at S&P Global Platts. “But the precedent has been set, and it will probably at least become a factor within OPEC decision making in the future.”

OPEC+ will meet again Jan. 4.

___

Knickmeyer reported from Washington. Associated Press writers Darlene Superville in Washington and Charles Sheehan in New York contributed.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

Protesters gather on the steps of the Utah State Capitol, at a rally to gain support for removing t...
Associated Press

In deeply Mormon Utah, a push to require clergy report abuse

SALT LAKE CITY (AP) — Survivors and faith leaders rallied Friday at the Utah State Capitol to demand change to a state law that exempts religious leaders from requirements that they report child sexual abuse brought to their attention in spiritual confessions. “If we as a people, as churches and as a state are failing […]
23 hours ago
FILE - The logo of the International Monetary Fund is visible on their building, April 5, 2021, in ...
Associated Press

IMF fees on war-torn countries closer to elimination

WASHINGTON (AP) — The International Monetary Fund is facing pressure to reevaluate how it imposes fees on loans it disperses to needy countries like war-torn Ukraine — which is one of the fund’s biggest borrowers. The move comes as more countries will need to turn to the IMF, as food prices and inflation internationally continues […]
23 hours ago
FILE - Republican candidate for U.S. Senate Leora Levy talks to delegates at the State Republican C...
Associated Press

Far-right wins in blue states threaten GOP hopes in November

HARTFORD, Conn. (AP) — Republicans have found success in Democratic strongholds like Maryland and Massachusetts when they have fielded moderate candidates who could appeal to voters in both parties. With Democrats facing headwinds this year, Republicans had hoped that strategy could pay off yet again. But Republican voters have nominated loyalists of former President Donald […]
23 hours ago
Millaray Huichalaf, a Mapuche machi, or healer and spiritual guide, poses for a portrait in the Pil...
Associated Press

On Chile rivers, Native spirituality and development clash

MELIPEUCO, Chile (AP) — Mist suddenly arose from the Truful Truful River as it flowed below the snow-covered Llaima volcano, and Victor Curin smiled at the sun-dappled water spray. A leader in one of the Indigenous communities by the river’s shores in the Chilean Andes, Curin took it as a sign that the waterfall’s ngen […]
23 hours ago
Millaray Huichalaf, a Mapuche machi, or healer and spiritual guide, poses for a portrait in the Pil...
Associated Press

On Chile rivers, Native spirituality and development clash

MELIPEUCO, Chile (AP) — Mist suddenly arose from the Truful Truful River as it flowed below the snow-covered Llaima volcano, and Victor Curin smiled at the sun-dappled water spray. A leader in one of the Indigenous communities by the river’s shores in the Chilean Andes, Curin took it as a sign that the waterfall’s ngen […]
23 hours ago
Associated Press

Today in History: August 20, deadly post office rampage

Today in History Today is Saturday, Aug. 20, the 232nd day of 2022. There are 133 days left in the year. Today’s Highlight in History: On Aug. 20, 1986, postal employee Patrick Henry Sherrill went on a deadly rampage at a post office in Edmond, Oklahoma, shooting 14 fellow workers to death before killing himself. […]
23 hours ago

Sponsored Articles

...
Day & Night Air Conditioning, Heating and Plumbing

Ways to prevent clogged drains and what to do if you’re too late

While there are a variety of ways to prevent clogged drains, it's equally as important to know what to do when you're already too late.
(Courtesy Condor)...
Condor Airlines

Condor Airlines shows passion for destinations from Sky Harbor with new-look aircraft

Condor Airlines brings passion to each flight and connects people to their dream destinations throughout the world.
...
Carla Berg, MHS, Deputy Director, Public Health Services, Arizona Department of Health Services

Update your child’s vaccines before kindergarten

So, your little one starts kindergarten soon. How exciting! You still have a few months before the school year starts, so now’s the time to make sure students-to-be have the vaccines needed to stay safe as they head into a new chapter of life.
OPEC, allies stick to modest output boost despite omicron