© Reuters. File photo: Silhouettes of towers and chimneys of Melbourne’s oil refinery on June 21, 2010. REUTERS/Mick Tsikas/File Photo
Melbourne (Reuters)-Prior to the meeting, oil prices were flat on Tuesday, and major oil-producing countries are expected to stick to their plans to increase supplies in February, as the surge in COVID-19 cases has not yet triggered lockdowns in the largest fuel-consuming countries.
At 0239 GMT, crude oil futures rose 1 cent to US$78.99 per barrel, while US West Texas Intermediate (WTI) crude oil futures fell 2 cents to US$76.06 per barrel.
On Monday, both benchmark contracts rose more than 1%.
The Organization of Petroleum Exporting Countries (OPEC), Russia and its allies — collectively referred to as OPEC+ — are scheduled to meet on Tuesday. The Joint Ministerial Oversight Committee will meet at 1200 GMT, followed by a ministerial meeting at 1300 GMT, both of which will be conducted through video conferences.
Three OPEC+ sources told Reuters that the organization may stick to its plan to increase production by 400,000 barrels per day in February, as it has done every month since August.
Royal Bank of Canada Capital Markets analysts said that given the current price outlook, pressure from the administration of US President Joe Biden to increase supply, and the absence of new COVID-19 liquidity restrictions, OPEC+ is unlikely to change direction.
“Although Omicron (COVID-19 variant) cases continue to climb in key areas, due to the lack of extensive lockdown restrictions, recent demand concerns may be contained,” Royal Bank of Canada analysts said in a report.
However, they said that if the tension between the West and Russia escalates due to the Ukraine issue and affects fuel supply, or Iran’s nuclear negotiations with major powers progress, OPEC+ may have to change its strategy, which will lead to an end to Iran’s oil supply. Sanctions.
“We think these two events represent major wildcards that may quickly change the price trajectory and test OPEC’s rapid response mechanism,” said an analyst at Royal Bank of Canada.
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