OPEC Plus decides to continue increasing oil production in January 2022
The members of the Organization of Petroleum Exporting Countries (OPEC) and their allies within the framework of the OPEC Plus alliance decided today, Thursday, to maintain their current policy to gradually increase production in January, which led to an additional drop in prices.
And the organization decided to “adjust the total monthly production of 400,000 barrels per day upwards in January,” as it has done since May 2021, according to what the cartel announced in a statement issued at the end of the video summit. And then prices fell to their lowest level since the end of last August.
The 23 members of the cartel led by Saudi Arabia and Russia had two options on the table: either an increase in January to the combined supply level of 400,000 barrels per day, as has been the case every month since May, or maintaining the supply level in December. December, which is 40 million barrels per day.
The choice fell on the first solution despite the discovery of the mutant Omicron, which poses a threat to the demand for crude oil, which urged investors to adopt a more cautious strategy on the part of “OPEC Plus”.
As a result, crude oil prices fell to $65 and $62, respectively, for Brent and West Texas Intermediate, the lowest level since August 23.
This increase in production responds to the wishes of Washington, which called on the cartel, as well as other major consumers, to increase production.
In the face of the coalition’s lack of response, the United States announced the use of its strategic oil reserve, and China, India and Japan followed suit, with the aim of increasing supply for a temporary period and controlling the rise in crude prices, lest this weigh on the economic recovery.
Washington has repeatedly called on OPEC to increase production as US gasoline prices have risen and President Joe Biden’s popularity has fallen.
Sources said before the meeting that the uncertainty in the market prompted the group to consider options such as temporarily halting the increase scheduled for January or increasing production by a smaller amount.
Any decision to raise production by less than 400,000 barrels per day in January, or even cut supplies, would have put OPEC in an open confrontation with Washington amid already frosty relations between the United States and Saudi Arabia.