Oil futures extend gains after OPEC+ output hike decision
03:23, 3 December 2021
Oil prices climbed on Friday with Brent rose nearly 1% amid uncertainties after the OPEC+ alliance’s decision to stick with its plan to increase production in January.
Brent crude oil futures, the international benchmark, rose 0.96% to $70.34 per barrel (bbl). West Texas Intermediate advanced 0.69% to $66.96.
The Organization of Petroleum Exporting Countries and its allies (OPEC+) voted on Thursday to keep its plan to increase oil production by 400,000 barrels per day (bpd) in January 2022. Markets had expected that the group would halt output hike to respond strategic reserves released by the US and other key oil consuming nations amid the spread of the Omicron variant which risks denting demand.
“There is still plenty of uncertainty in the near term with regards to price direction and as a result, the market is likely to remain volatile. The short-term outlook will depend on how governments around the world react to the Omicron variant in the coming weeks,” analysts at ING Group wrote in a note on Friday.
ING said OPEC+ appeared to buy themselves more time by deciding to keep its production plan due to uncertainty around the full impact of Covid-19’s Omicron variant.
“So deferring a potential decision until there is more clarity is likely the best course of action,” ING’s analysts said.
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Iran nuclear deal
Adding to uncertainty, the market also has to deal with the increasing likelihood of an Iran nuclear deal, said analysts at ANZ Research in a note on Friday.
Al Jazeera reported that Iran on Thursday submitted two drafts on sanctions removal and nuclear commitments to Europe. A European diplomat confirmed draft documents had been handed over, according to the Qatari broadcaster.
Analysts have said if Iran, the US, and other powers agreed to revive a 2015 nuclear deal and lifted sanctions on Iran, the market would see additional supply coming from the country.