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By Tsvetana Paraskova
OPEC+ decided to proceed with its monthly production increases, Saudi Arabia cut the prices of its oil to Asia, OPEC believes the market will be well-supported through 2022, companies signed major oil, gas, and renewable development deals, and an attack on the United Arab Emirates (UAE) marked the first weeks of the New Year in the Middle East’s energy sector.
OPEC+ continues to unwind cuts The OPEC+ group of oil producers decided in early January to proceed unwinding the collective oil output cuts by another 400,000 barrels per day (bpd) in February, signaling confidence in global oil demand despite the Omicron wave of record-high COVID cases in many countries. So in February, the OPEC+ group will be allowed to pump up to 40.894 million bpd, of which 24.808 million bpd for the ten OPEC members of the OPEC+ pact and 16.086 million bpd for the non-OPEC producers part of the deal. Yet, analysts have been warning for weeks that many members in the OPEC+ group, especially African OPEC members, do not have the capacity to increase their production and pump to their quotas. This will lead to fewer actual barrels coming on the market than the 400,000-bpd planned monthly production increase from OPEC+. Moreover, higher production has started to shrink the spare capacity globally, most of which is located in the Middle East—another bullish factor for the oil market these days.
www.ogv.energy I February 2022
Following the OPEC+ meeting, Saudi Arabia reduced its official selling prices (OSPs) to Asia for February, having hiked those prices in the two previous months. All Saudi grades sold in Asia in February will see their official selling prices reduced by between $1.00 and $1.30 per barrel. Industry officials had widely expected a cut in Saudi prices for Asia for February, after the large increase n OSPs for January.
OPEC confident in oil demand in 2022 OPEC expects the oil market to be wellsupported through 2022, despite the Omicron wave and the expected monetary tightening of major central banks, including the Fed, the organization said in its Monthly Oil Market Report (MOMR) on 18 January. OPEC left its global oil demand growth forecast for 2022 unchanged at 4.2 million bpd, expecting average global consumption to reach 100.8 million bpd and exceed preCOVID levels. The impact of the Omicron variant on oil demand turned out weaker than OPEC had
expected, the cartel said and adjusted its oil demand forecast for the fourth quarter of 2021 higher, “mainly to account for strongerthan-expected demand in Americas and the Asia Pacific and despite the emergence of the new COVID -19 variant (Omicron).”
“In summary, monetary actions are not expected to hinder underlying global economic growth momentum, but rather serve to recalibrate otherwise overheating economies. With an ongoing robust oil demand forecast, and the continuing efforts of OPEC Member Countries and non-OPEC countries participating in the DoC, the oil market is expected to remain well-supported throughout 2022,” OPEC said in its monthly report for January. For yet another month, OPEC’s production increase was lower than what it is entitled to under the deal, per secondary sources in the organization’s report. OPEC’s crude oil production rose by 170,000 bpd in December, lower than the 253,000-bpd allowed monthly increase under the OPEC+ agreement.
