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OPEC and Russia to Decide on Tuesday Whether to Increase Output in February

OPEC and Russia to Decide on Tuesday Whether to Increase Output in February

OPEC, Russia and other crude producers will decide on Tuesday whether to increase oil supply by 400,000 barrels a day in February, following their plan to gradually recover from the pre-pandemic level.

According to sources at the secretariat of the Organisation of the Petroleum Exporting Countries (OPEC) cited by the Efe news agency, the decision is expected to be taken at a ministerial teleconference of a group of 23 countries in Vienna at 13:00 in Lisbon.

But before that, during this afternoon, the ministers responsible for the sector of 13 OPEC members will hold a virtual meeting focused on the nomination of a possible successor to the current Secretary General of the organisation, the Nigerian Mohamed Barkindo, whose mandate expires at the end of July.

Two internal committees, one at technical level and the other at ministerial level, respectively, will be held between today and tomorrow to study the latest developments in the global crude markets. The conclusions will be taken into account in the decision by OPEC and its allies, OPEC+.

According to analysts cited by Efe, the alliance, led by Saudi Arabia and Russia, is expected to approve the next phase of the plan adopted in July 2021, which envisages increasing daily production by 400,000 barrels per month until September this year.

The aim is to return production levels to the market before the 9.7 million barrels per day cut adopted in April 2020 to offset the historic drop in energy demand caused by restrictions on mobility to stem the spread of the covid-19 pandemic.

At its most recent virtual meeting on December 2, OPEC+ confirmed the increase for this month, which brings joint production from 40.094 million barrels per day to 40.494 million barrels per day.

Of this volume, 24.554 million barrels per day correspond to the production by OPEC members (without Venezuela, Iran and Libya) and 15.94 million barrels per day to the group of allies.

Venezuela, Iran and Libya do not integrate these limits since their industries face involuntary declines, attributed to reasons such as sanctions, conflicts or crises.

According to the Spanish news agency, Iranian crude exports could return to international markets later this year if a deal is reached in international negotiations in Vienna to revive the agreement on its nuclear programme.

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The increase in oil supplies by OPEC+ comes after the United States and other countries announced in November that they will use their strategic oil reserves, in a coordinated initiative, to try to lower prices.

The operation is carried out in parallel with other States that are major oil consumers, in particular China, India, Japan, South Korea or the United Kingdom, according to the White House.

Faced with the Omicron variant, OPEC left its forecast for global oil demand in 2022 unchanged in its latest report, estimating a “slight and short-lived” impact.

The organisation’s experts estimate consumption to increase by 4.15 million barrels per day to 100.79 million barrels per day this year, up 4.3% from 2021.

The price of a barrel of Brent crude, the benchmark in Europe, rose 52% last year, ending the year at $77.78 (€65.5 at the current exchange rate), while the price of a barrel of Texas WTI oil rose 55% to $75.21 (€66.25).

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