RIYADH: The Organization of the Petroleum Exporting Countries and its allies, a grouping called OPEC+ does not see crude releases from the strategic petroleum reserves of several countries led by the US creating an meaningful impact on the global oil market as some are voluntary and some exchanges.
The alliance of world’s top oil producers on Wednesday began two days of deliberations to discuss the current market situation and to decide whether to release more oil into the market or restrain supply amid big gyrations in crude prices and fears about weaker energy demand because of the omicron coronavirus variant.
Shortly after the OPEC talks began, a delegate told Reuters that the group was not discussing changes to output policy for now.
Russia and Saudi Arabia, the biggest OPEC+ producers, had said ahead of this week’s meetings that there was no need for a knee-jerk reaction to amend policy.
Iraqi Oil Minister Ihsan Abdul Jabbar said he expected OPEC+ to extend existing output policy in the short term, Iraq’s state news agency reported.
Since August, the group has been adding an additional 400,000 barrels per day of output to global supply, as it gradually winds down record cuts agreed in 2020, when demand cratered because of the pandemic.
Even before concerns about omicron emerged, OPEC+ had been weighing the effects of last week’s announcement by the US and other major consumers to release emergency crude reserves to temper energy prices.
OPEC+ internal data, in a report seen by Reuters, forecast a 3 million bpd surplus in the first quarter of 2022 after the release of reserves, up from a previous forecast of 2.3 million bpd.
“Generally, the impact of Omicron seems to be jet-fuel related for now, particularly in Africa and Europe,” the report said, as many countries barred travelers from southern Africa and some European states imposed new coronavirus restrictions.
“Transportation fuel demand within Europe might be also affected,” the report added.
Diamantino Pedro Azevedo, Angola’s minister of mineral resources and petroleum, who is also president of the OPEC Conference, stressed the need for a joint strategy to deal with “downside risks associated with inflation spikes, rising debt levels and supply-chain disruptions.”
“We need to remain united, focused and ready to adapt to any changing market dynamics,” Azevedo said.
He praised Saudi Energy Minister Prince Abdulaziz bin Salman and Russian Deputy Prime Minister Alexander Novak who the alliance “moving in the direction of recovery and stability.”
OPEC+ has been gradually scaling back last year’s record output cuts of 10 million bpd, equivalent to about 10 percent of global supply. About 3.8 million bpd of cuts are still in place.
But OPEC’s November oil output has again undershot the level planned, as some OPEC producers have struggled to hike output.