After OPEC+ continues to increase production...

On January 4, local time, a new round of OPEC and non-OPEC producers (OPEC+) meetings announced that major oil producers will continue to implement the decision
to increase production by 400,000 barrels per day.

OPEC+ expects the impact of the new coronavirus variant Omicron on global energy demand to be temporary
.
OPEC+ has been increasing production at 400,000 b/d per month since August and is meeting monthly to review the policy until output returns to pre-pandemic levels
.

On the day after the news was announced, Brent crude oil futures rose about 1.
9% to $80.
5 per barrel; WTI futures rose about 2 percent to $77.
58 a barrel
.

The pandemic does not affect demand

Last month, Omicron triggered worldwide travel bans and restrictions, threatening economic growth and oil demand
.
According to statistics from Johns Hopkins University in the United States, the United States has had more than 1 million new confirmed cases of new crowns in a single day for many consecutive days
.

But OPEC+ doesn't think Omicron will have the same impact
it did when the pandemic first began in the spring of 2020.

Rystad Energy analyst Bjornar Tonhaugen said OPEC+ confidence has strengthened, in part because global real-time shipping data shows that Omicron has not yet had any significant impact
on oil demand.

In addition, a World Health Organization official said recently that there is growing evidence that Omicron causes milder
symptoms than previous variants.
In some areas, hospitalization and death rates are lower than in other phases
of the outbreak, despite the number of cases soaring to record highs.

OPEC representatives also pointed out that the current strengthening of oil demand, including in the petrochemical industry, is offsetting the impact
of the continued decline in jet fuel consumption.
As natural gas prices in Europe and Asia soared, with wholesale gas prices in Europe rising five or six times higher than they were at the start of 2021, many utilities had to adopt fuel oil and coal to generate electricity, boosting oil demand
.

OPEC lowered its oil surplus forecast for the first quarter of this year, saying that global oil production will be 1.
4 million b/d above demand in the first quarter, compared with its previous assessment of 1.
9 million b/d
.

The International Energy Agency's recent monthly oil market report said Saudi Arabia and Russia could reach record highs if OPEC+ production cuts are finally lifted completely
.
Coupled with rising crude oil production in the United States, Canada, Brazil and other countries, the average daily global crude oil supply will increase by 6.
4 million barrels per day in 2022, up from 1.
5 million barrels in 2021
.

This year's increase could be double-digit

Last year, OPEC+ held 11 ministerial meetings, and although the process was tortuous, the final shelving of differences among member countries helped oil prices out of the gloom
.
Brent crude oil prices rose 50% last year and have continued to rise this year, currently trading
around $80 a barrel.

Goldman Sachs expects Brent crude oil prices to remain around $85/barrel in 2022 and 2023, and may even exceed $100/barrel
.

J.
P.
Morgan also believes that due to the combined impact of factors such as global economic recovery, declining crude oil inventories and slowing production capacity recovery, the annual increase in international oil prices in 2022 will continue to reach double digits
.

However, Huang Liunan, senior researcher at Guotai Junan Futures Energy, previously said in an interview with the "International Finance News" that in the medium term, the Fed's hawkish statement on accelerating debt reduction may allow the commodity market to continue to trade the bearish of the opening of the tightening cycle
.
Considering that inflationary pressures in the United States are significantly greater than in Europe and other economies, the upside risks to the dollar in the future are high, which will seriously constrain the rebound
in oil prices.

Some analysts warn that OPEC+ may have to change tactics
if tensions between the West and Russia over Ukraine erupt and hit fuel supplies, or if Iran's nuclear talks with Western countries progress, which will lead to the end of U.
S.
oil sanctions on Iran.

Transversal Consulting's energy industry analyst Ellen Wald said that Russia is currently the world's third-largest oil producer, due to European military operations, Russia's oil exports may face sanctions, considering that Moscow controls a number of European gas pipelines, involvement in the conflict may further lead to a surge
in oil prices.

On the Iranian side, the United States said a few days ago that there has been some moderate progress in the talks with Iran, and the United States hopes to achieve further results
on this basis.
JPMorgan expects Iran could add 1.
4 million b/d of additional capacity
next year if the U.
S.
finally decides to lift sanctions.