Oil prices extended their gains to more than 2%, during trading today, Thursday, with the expectation of the OPEC + alliance’s decision on production policy.
Investors expect the major producers in the OPEC + alliance to stick to the policy of production and gradually ease production cuts, ignoring previous concerns about the resumption of Iranian nuclear talks that could lead to an increase in oil exports from Tehran.
Oil Prices Today
By 12:10 pm GMT (03:10 pm Mecca time), Brent crude futures prices – January 2022 delivery – rose by 2.2%, recording $ 83.77, after declining during the last session by 3.2%, recording $81.99 a barrel, the lowest close since October 8.
The prices of West Texas Intermediate crude futures – for December delivery – also rose by 2.1%, to record $ 62.62, after falling by about 3.6%, to record $ 80.86 a barrel during trading yesterday, Wednesday, which is the lowest level for this most active contract since the October 13 session. last October.
This comes in conjunction with the shift in focus of traders to the meeting of the Organization of Petroleum Exporting Countries (OPEC) and its allies from abroad, led by Russia, in the alliance known as OPEC +, later today, Thursday.
The alliance is expected to reaffirm its plans to keep the monthly increase in supply constant, despite calls for an acceleration of production increases.
Prices had started trading lower today after Iran and 6 powers agreed to resume talks on November 29 to revive the 2015 nuclear agreement in Vienna, as Iran demanded the United States to drop sanctions that limited its oil exports.
“We agreed to start negotiations aimed at lifting illegal and inhumane sanctions on November 29 in Vienna,” Iran’s chief nuclear negotiator, Ali Bagheri Kani, said.
Tehran and the six powers began discussing ways to save the nuclear agreement in April, which former US President Donald Trump withdrew from in 2018, and re-imposed sanctions on Iran
The six rounds of talks held so far have been indirect, with European diplomats moving mainly between US and Iranian officials because Iran refuses direct contact with the United States.
News of the resumption of nuclear talks between the United States and Iran has likely eliminated any last hope for OPEC+ to boost production targets and support prices.
Analysts at Citi said OPEC+ was likely to stick with current policy despite pressure from oil importers.
The bank added in a note: “The majority of OPEC + members cannot raise production from the current levels… while Saudi Arabia stressed the need to be vigilant about demand growth, in light of the increasing cases of Corona, while boosting crude oil production.”
OPEC+ sources said that the major producers, Saudi Arabia and Russia, are also more confident that higher oil prices will not lead to a quick response from the US shale oil industry; This reflects a desire to rebuild revenues and supports the argument against increasing OPEC+ production faster.
US President Joe Biden has urged the major oil-producing countries of the Group of Twenty that have spare capacity to boost production to ensure a stronger global economic recovery.
Many major oil companies plan to increase production or spending on shale oil next year, which could undermine OPEC+ efforts to control supply and support prices.
“With oil prices rising, it is increasingly likely that oil production growth will resume,” said Josh Young, chief investment officer at Payson.
And total US crude production rose, last week, to 11.5 million barrels per day, according to the latest US Department of Energy figures, something close to its peak of about 13 million barrels per day before the outbreak of the Corona virus pandemic last year.
Increased planning in shale oil will come from major companies, especially from the Permian Basin, the largest oil shale field in the United States; The change comes after pressure from the White House for more production as retail fuel prices rise.
Permian production is expected to reach 4.89 million barrels per day in November; That is just below the peak of 4.91 million barrels per day in March 2020 before the pandemic.
SOURCE : OPEC+