Morse and others say moves that once seemed unusual may become more commonplace as the world shifts away from dependence on oil to electric vehicles, for instance - perhaps with new momentum imparted by the recent climate summit in Glasgow.
What OPEC can do about this development, though, remains to be seen. Morse, global head of commodities strategy at Citigroup, said in a video message to clients. “This is a complaint about prices that are ‘regulated’ by OPEC countries,” Edward L. This release, though, is, in effect, a protest over what oil-consuming nations perceive as excessively rapid price increases, at least partly because of artificial constraints on supplies by the Organization of the Petroleum Exporting Countries and its allies. The last came in 2011 when civil strife in Libya disrupted oil supplies from that country. Previous coordinated releases have been rare events, in response to disruptions in supply. Over time, the strategic reserve releases could be a more worrying development than Omicron for OPEC Plus. Maintaining the planned increase would probably ease friction with the Biden administration, which orchestrated the release of oil stocks from the United States Strategic Petroleum Reserve in conjunction with smaller moves by other large oil consumers. It could even decide to cut production, although that option seems unlikely.īecause it’s too early to know what impact the Omicron variant may have on the world economy, the easiest move may be to stick with the agreed-upon plan and wait until the group’s next meeting, in January.
Bronze and other analysts say those worries may lead OPEC Plus to pause for a month or more the program to increase supplies each month. OPEC Plus has helped orchestrate a price rise of more than 50 percent this year through careful supply management, and its members will not want those gains to slip away. Analysts say the oil officials will be mindful of the severe price crashes that occurred in the early months of the pandemic in 2020, when some futures prices fell into negative territory, and in 2014, after Saudi Arabia temporarily walked away from trying to manage the markets.