Oil prices rose as investors expected oil producers to increase supply at Tuesday’s meeting, a sign that fuel demand remains strong despite the spread of the Omicron variant of COVID-19.
Brent crude futures rose 43 cents to $79.41 at 0502 GMT, while West Texas Intermediate (WTI) crude offset previous losses and rose 33 cents to $76.41 a barrel.
Both contracts were up more than 1% on Monday.
Currently the number one driver of global oil prices is that the supply side of the market is governed by OPEC+. Meanwhile, the production cuts in Libya and Ecuador are important supporting factors affecting global supply. Fuel demand concerns stemming from the Omicron spread are waning. Not surprisingly, crude oil releases from national strategic oil reserves of various countries were smaller than expected and failed to break OPEC+’s plans.
The Organization of the Petroleum Exporting Countries (OPEC), Russia and its allies will meet today. The Joint Ministerial Monitoring Committee will meet at 1200 GMT, followed by a ministerial meeting at 1300 GMT, both via videoconference.
Based on the current situation, it is said that OPEC+ is unlikely to change course, with the US pressure to increase supply and the spread of COVID-19 variants, and it will stick to its plan to increase production by 400,000 barrels per day in February.
While cases of Omicron (COVID-19 variant) continue to climb in key geographies, the absence of widespread lockdown restrictions will likely keep short-term demand concerns in check.
Despite the potential impact on international travels while the Omicron cases step-by-step, economies like Australia are sticking to reopening plans, and factory activity increased in Asia as well last month for instance.
Meanwhile, OPEC+ may have to change its strategy if tensions between the West and Russia over Ukraine escalate and fuel supplies are affected, or if Iran’s nuclear talks with major powers make progress and this ends oil sanctions on Iran.