OPEC+ Announced that it will Continue to Increase Production

OPEC+ decided on Thursday to continue to increase production by 400,000 barrels per day as originally planned, but also said that due to the huge market uncertainty, they may reconsider this decision at any time.

According to media quoted people familiar with the matter, due to concerns about oversupply, OPEC+ member states considered a series of options in Thursday’s talks, including suspending plans to increase production by 400,000 barrels per day in January or reducing oil production growth, but any similar Any action may cause the organization to conflict with the United States, so OPEC+ finally decided to continue the agreement on increasing production.

White House spokesperson Jen Psaki said after the meeting: “We appreciate the close cooperation with Saudi Arabia, the UAE and other OPEC+ member states in recent weeks to help deal with price pressures. Together with our recently coordinated release of SPR, I believe this will help. To promote the recovery of the global economy.”

Before that, due to the soaring domestic gasoline prices in the United States and the continued decline in the approval rate of US President Biden, the United States has repeatedly urged OPEC+ to accelerate production. In order to suppress oil prices, the United States has joined other major oil consuming countries in a joint strategic oil reserve.

   OPEC senior observer Gary Ross commented: “Politics trumps the economy, and oil-consuming countries have exerted enough pressure, but the weakening of prices now means that they will strengthen in the future.”

OPEC+ worried that Omi Keron mutant strains might depress market demand, a representative said after the meeting: “We must pay close attention to the market to see the true impact of Omi Keron.”

The OPEC+ ministers were originally scheduled to meet on January 4 next year, but the organization issued a statement stating that if the market situation requires them, they may meet again before then.

After OPEC+ made the decision to increase production, Russian Deputy Prime Minister Alexander Novak said in an interview that the oil market is balanced and global oil demand is slowly rising.

Jeffrey Currie, Global Head of Commodity Research at Goldman Sachs, said that in the current environment, it makes sense for OPEC+ to continue to increase production. Although it will hit market sentiment and fundamentals in the short term, it is based on the position of price relative to the potential cost structure. Look, it is difficult to conclude that the price will fall even lower.

After OPEC+ announced an increase in production, the price of Brent crude oil futures fell to 66 US dollars per barrel, but then rebounded above 70 US dollars.

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Summary

OPEC+ decided on Thursday to continue to increase production by 400,000 barrels per day as originally planned, but also said that due to the huge market uncertainty, they may reconsider this decision at any time.

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