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OPEC+ continues planned production increases

At its latest ministerial meeting, the OPEC+ group of oil producers have agreed to proceed with the next step in easing production quotas by 400,000 barrels per day.

Prior to the meeting, Prince Abdulaziz bin Salman, the energy minister of Saudi Arabia, closed the longest meeting in OPEC history, which had opened on December 2 and lasted 33 days. The meeting had been left open in case the organisation needed to rapidly revise its initial decision in reaction to changes in demand.

This time, the very short meeting met with few surprises and quickly decided to proceed with increasing the total production cap, something that had been widely expected given the low level of Omicron-related restrictions around the world and pressure from the United States to increase supply. Kazakhstan’s limited compliance with the production cuts was highlighted, however, with pressure being applied for the country to improve this.

Ahead of the meeting, S&P Global Platts’ OPEC and Middle East news managing editor, Herman Wang, said to CNBC that people should:

“Look at the resilience of the market so far to the omicron variant, which OPEC, of course, has dismissed as mild and short-lived. So, there’s a lot of optimism around what demand is going to do even though there are these predictions of looming oversupply in the first quarter.”

Oil prices therefore look to remain relatively stable for oil and lubricant producers like Exxon Mobil and Shell, although the OPEC+ group’s thinking may change by the next meeting on February 2.

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