Opec+ agrees to 400,000 b/d hike for February: Update

Adds detail throughout and table with country-by-country quotas

The Opec+ alliance opted today to press ahead with a 400,000 b/d increase in its crude output quota for February.

This is in line with a roadmap agreed in July last year to gradually unwind the huge production cut implemented in the early stages of the Covid-19 pandemic. The decision to stay the course comes after the group played down concerns about the effects on oil demand from the Omicron variant.

"The analysis shows that despite the high level of [Omicron] infections, hospitalisation rates are quite low, so this would not impact… demand [for oil]," Russian deputy prime minister Alexander Novak told Rossiya 24 television following the conclusion of the meeting. "We believe that it is necessary, therefore, to continue fulfilling the obligations that Opec+ assumed [as part of this plan]… therefore a general decision was made that in February production will increase by 400,000 b/d."

Today's meeting to decide the February quotas was "smooth", according to two delegates, in stark contrast to the group's prior gathering just days after the emergence of Omicron in early December. Then, the uncertainty surrounding the new variant meant Opec+ ministers formally kept the December meeting "in session", to monitor the market closely and make "immediate adjustments" if needed. Saudi Arabia's energy minister Prince Abdulaziz bin Salman officially closed the December meeting today, delegates said, before declaring the new meeting open.

Yesterday, the group's Joint Technical Committee reviewed an Opec secretariat report that played down disruption from Omicron. The report forecast the effect of the variant would "be mild and short-lived, as the world becomes better equipped to manage Covid-19 and its related challenges". As a result, the Opec secretariat kept its forecast for global oil demand growth in 2022 unchanged from its previous projection, at 4.2mn b/d.

"Growth previously expected in the fourth quarter of 2021 now shifted to the first quarter of 2022," it said.

But the secretariat sees much tighter supply-demand balances for this year compared with its previous projections. In its base case - one of three scenarios discussed in the report - the secretariat put the global surplus at 1.4mn b/d in the first quarter, down markedly from the 3.1mn b/d oversupply forecast last month. It forecasts the surplus at 1.4mn b/d for the full year, down from a previous projection of 1.7mn b/d.

The changes were down to revised assumptions for the effects of Omicron and for the timings of the planned release of more than 60mn bl of strategic crude reserves by the US and five other major countries over the coming months, one delegate said. The front-month Ice Brent crude price rose today, briefly topping $80/bl. At 16:06 GMT it was up by 1pc at $79.77/bl.

The next Opec+ meeting will take place on 2 February.

By Adal Mirza, Ruxandra Iordache, Nader Itayim and Anastasia Krasinskaya