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OPEC+ meeting to decide on oil supply as omicron Covid cases soar

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An oilfield worker at Almetyevneft’s oil and gas production board (NGDU), of Tatneft.

Getty Images| TASS | Getty Images

A powerful group representing some of the largest oil producers in the world will gather Tuesday to discuss next steps of production policy. Investors are weighing the possible impact on soaring Omicron Covid cases.

OPEC and non-OPEC ally OPEC+ will hold a conference call from noon London time.

OPEC+ is a member of raisedSince August, the company has produced 400,00 barrels of oil per day as its monthly output goal. Analysts believe that they will maintain this policy in February due to U.S. supply pressures and no new Covid restrictions.

The energy alliance, which is led by OPEC kingpin Saudi Arabia as well as non-OPEC leader Russia has been working to unwind record supply cuts of approximately 10 million barrels per daily. After the severe coronavirus pandemic that decimated crude oil demand, the historic production reduction was implemented in April 2020.

Oil prices hover around $80 per barrel. That’s likely to be higher than the actual price. [U.S. President] Joe Biden wants,” Herman Wang, managing editor of OPEC and Middle East news at S&P Global Platts, told CNBC’s “Street Signs Europe” on Tuesday.

You can also look at how resilient the market has been to the omicron variation, which OPEC dismisses as short-lived and mild. Wang explained that while there were predictions of oversupply, there was a lot of optimism regarding what demand would do.

“I believe we will continue to expect OPEC+’s 400,000 barrel per-day increase at this meeting.” They will do something at both the February and March meetings, but that’s a different problem.

Geopolitical wildcards

International benchmark BrentCrude futures were up 0.8% to $79.63 per barrel in morning London deals. U.S. West Texas IntermediateFutures were $76.65 per barrel. This is approximately 0.75% more than the current price.

Last year’s oil prices rose more than half a percent. energy investors optimisticThe highly contagious omicron variant might be less serious than previously thought. This is despite Covid cases reaching record levels in the United States. global daily recordIn just 24 hours, over 1,000,000 infections were reported.

It is widely believed that the world oil market will remain vulnerable to geopolitics into 2022. This could be due to “saber-rattling” about persistent petroleum issues. Russia-Ukraine standoffBoth ongoing Iranian nuclear negotiationsOPEC+ will likely be closely monitoring.

Helima Croft from RBC Capital Markets’ global commodity strategy, said that “I think it’s these geopolitical Wildcards” and spoke to CNBC’s Capital Connection on Tuesday.

Croft stated that Russia and Ukraine are a “really incredible wildcard” because Russia could get severe sanctions if they send troops across the border to Ukraine. This would lead to an energy crisis in Europe if Russia stops gas from Europe.

OPEC announcedOn Monday, the Kuwaiti government announced that Haitham Al-Ghais (Kuwait) would be its secretary-general beginning in August.

Al-Ghais is a technocrat with over 30 years of experience in oil and gas industry. He will succeed Mohammad Sanusi Barkindo as the top diplomat for the group.

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