- OPEC+ is expected to continue with its plan to increase its production quota 400k BPD
- The Omicron variant impact is expected to be mild and short-lived, according to the JTC findings
- The meeting is expected to be smooth, but the issue of underproduction by some states may cause some friction
OVERVIEW: Tuesday’s Joint Ministerial Monitoring Committee (JMMC) will start at 12:00GMT/07:00EST followed by the OPEC+ meeting at 13:00GMT/08:00EST. Delegates suggested OPEC+ is expected to maintain plans to increase its February output quota by 400k BPD. The Joint Technical Committee (JTC) reviewed market fundamentals and downplayed the demand impact from the Omicron variant. The meeting is expected to be straightforward, but the issue of underproduction by some states (amid maintenance and underinvestment) may cause some friction among producers.
DEMAND DEVELOPMENTS: The Omicron variant’s mild diagnosis so far has alleviated much of the initial fears seen in the earlier days of discovery. Some positive noises have also been emanating from some European countries – a Danish health chief remarked the Omicron variant is bringing about the end of the pandemic, whilst a German COVID expert suggested Omicron could take the pandemic into an endemic situation – more comparable to a common cold or flu. The UK and US meanwhile refrained from imposing much stricter measures, albeit China stands by its “zero-COVID” policy. Elsewhere, participants also keep the US winter storms on the radar impacting activity and potentially oil transit, whilst some airlines cancelled hundreds of flights amid the weather.
SUPPLY DEVELOPMENTS: Some OPEC+ members are struggling to meet their upped production quotas amid a mixture of maintenance, underinvestment and domestic unrest. The IEA last month suggested producers missed their targets by 730k BPD and 650k BPD respectively. Meanwhile, Libya – currently exempt from OPEC+ quotas – shuttered a further 200k BPD of production to fix a broken pipeline.