At its December meeting, the OPEC+ group – which includes OPEC and some partnering non-member, oil-producing countries, most notably Russia – has agreed to proceed with its planned 400,000 barrels per day (bpd) increase in oil production in January.
The group has been gradually unwinding its production cuts as the demand for oil has returned, but there was some speculation that the group may hold back further increases due to a planned release of oil reserves by the United States and other big oil consumers. There are also concerns that the new Omicron coronavirus variant will cause some restrictions to be brought back and hit the demand for oil.
It would appear that, for now, OPEC is anticipating that any restrictions will soon be relaxed if the new variant turns out to have milder symptoms than previous variants or is still susceptible to current vaccines.
Nevertheless, despite not seeing grounds for an immediate change in direction, the group agreed to make the unusual step of not formally closing the meeting. This means it can continue assessing the markets and make immediate adjustments to shore up oil prices, instead of waiting for the next scheduled meeting in early January.
Oil prices now look set to remain at around the $70 per barrel mark, well below the $86 per barrel seen earlier in the year. This should help reduce the cost of fuel and oil-derived products like the Morris Versimax commercial vehicle oil, which will provide some relief for motorists, as well as major economies where rising energy prices have been driving inflationary pressures.