Publisher: Maaal International Media Company
License: 465734
Although oil prices have fallen for 6 consecutive weeks, across the world markets, however, Brent, the benchmark blend price is still in a moderate correction zone, hovering around $70 barrier per barrel, after sharp price swings seen, in the past few weeks.
Contrary to most expectations, OPEC+ committed to increasing the monthly production as planned, in next January, in advance without yielding to any media or American pressure.
The organization and its allies, in addition to other independent exporters, have decided to continue the gradual production increase of 400,000 barrels output per day, that was agreed upon, in July 2021.
That has taken place, despite concerns over the new mutating strain, or in other words, Omicron variant effect, and the widely publicized option of drawdown from the strategic stockpiles’ reserves, through releasing supplies into the markets, to quench demand concerns.
Nonetheless, OPEC+ have left the door open to change the adopted production policy, as soon as the markets stand in need to intervene, in response to any contingency, that may ensue due to volatility.
The decision of OPEC + was based on a relatively balanced market as well as a continuous recovery of oil demand, following succeeding, in maintaining the stability of the global oil markets, regardless of the American and the ongoing media pressures, favorable to the sharp fluctuations, in prices, which fell by about $15 in 3-week.
While no indications have been seen, yet, from the physical markets’ weakness or fears that the weak forecast for oil demand, in 2022, may cause an oversupply.
The decision to continue the gradual increase, in production, was based on strong market fundamentals, while market sentiment (a technical) even if it affected the price movement, but it would not affect the OPEC+ production policy. Subsequently, any change in production policy will depend only on the ministerial consensus (ONOMM), away from neither media pressures nor leaks promoting bearish sentiment, in the market.
The market has always been affected by media pressures that often inject bearish sentiment, as we have experienced, a lot, prior to the OPEC+ meetings, as leaks have gone viral through media outlets, about a report from within OPEC, warning of an unusual acceleration, in the piling of commercial oil stocks, during the first quarter of 2022.
Ironically, this report expects the oil surplus to increase to 2 million barrels per day, in January, 3.4 million barrels per day in February, and 3.8 million barrels per day in March 2022, as if to say the supply would increase, in a forward progression.
Why were these oversupply expectations figures have not published in OPEC’s latest monthly report? It goes without saying, that such bearish sentiment could have been easily passed through, outright ignored or even dismissed.
I do not think that OPEC has administer such a media leak before the ministers’ meeting, to hint at an upcoming change in production policy, because such a bold decision taking, shall depend only on ministerial consensus and no way to be known, in advance.
The decision to continue OPEC+ production policy without change, falls in line to deny and refute any report or bearish sentiment, that had been leaked from within the organization, and it is also a compelling evidence, that the continued concerted coordination and consensus among OPEC+ member states orchestrated, for the 5th year, in a row, expected to remain, in place, as there is no long-standing indication of a real change, on the demand front.
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