The coalition sticks to its plan whilst acknowledging lingering uncertainties
OPEC+ decided today to stick to its plan of increasing production by 400 kbd in January. This comes as somewhat of a surprise as the group was widely expected to reduce or pause its production increases,, because of concerns posed by the Omicron variant. However, the group acknowledged the prevailing uncertainties and indicated that it is watching the developments closely and is willing to make immediate changes, if necessary. In an unusual move, the status of today’s meeting is left “in session”.
The decision to stick to the output hike is good news for the tanker market and gives us more confidence that our base case scenario is still the most likely. That said, downside risks continue to persist for the tanker market, with the US-led coalition willing to release oil from strategic reserves and OPEC+ open to making immediate changes to production quotas if required. We are monitoring these developments closely and will continue to update our clients if there are significant changes to our base case view.