BAKU, Azerbaijan, Jan.5
By Leman Zeynalova – Trend:
Libyan outages could lead to calls for larger increases in OPEC+ output, Trend reports with reference to the UK-based Capital Economics research and development company.
At the 24th meeting held on January 24, ministers of OPEC+ members reconfirmed the production adjustment plan and the monthly production adjustment mechanism approved at the 19th OPEC and non-OPEC Ministerial Meeting and the decision to adjust upward the monthly overall production by 0.4 mb/d for the month of February 2022.
Capital Economics believes that the decision was widely expected, and oil prices barely moved on the news.
“For now, the new Omicron variant, although highly transmissible, is not leading to the same rates of hospitalization and death associated with earlier variants. As a result, for the most part, governments have not imposed the widespread lockdowns or travel restrictions which significantly dent oil demand. At the same time, output from Libya has fallen sharply on the back of damage caused by civil unrest and maintenance to pipeline infrastructure. With Libyan output likely to be about 500-600,000 bpd lower in the coming weeks, this more than offsets the planned monthly increase in OPEC+ production. Indeed, if sustained, the Libyan outages could even lead to calls for larger increases in OPEC+ output,” the company analysts say.
In any case, Capital Economics remains of the view that as OPEC+ continues to raise production in the coming months and demand growth normalizes, oil prices will come under downward pressure.
“Our end-2022 forecast for Brent crude is just $60 per barrel, down from close to $80 today,” said the company.
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