OPEC+ agrees to increase oil output in February
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OPEC+ agrees to stick with increase in oil output in February amid expectations of Omicron having a short-lived impact on energy demand.
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Oil prices rose 1.5% as OPEC+ producers agreed to stick with their planned increase.
OPEC+ has agreed on Tuesday to keep its planned increase in output for February unchanged, leading oil prices to rise by 1.5%.
The group countries comprising OPEC and other oil-producing partners have been raising their output target each month since August by 400,000 bpd.
"The oil market is bullish today as a result of optimism sourced from today's monthly OPEC+ meeting, which is helping oil prices trade higher," said Rystad Energy's head of oil markets, Bjornar Tonhaugen.
The decision was made as OPEC+ expects Omicron to have a short-lived impact on global demand for oil.
"It appears that the market is making the bet that OMICRON is the beginning of the end of COVID-19," said an energy specialist at United ICAP, according to Reuters.
However, two developments may led OPEC+ to revise its plans. One being the flaring of tensions between Russia and NATO over Ukraine, which may disrupt fuel supplies. The other is the Vienna Talks, which may lead to an end of sanctions on Iran.
"We think these two events represent major wildcards that could quickly alter the price trajectory and test OPEC's rapid response mechanism," RBC analysts said.
