According to reports, the Organization of Petroleum Exporting Countries (OPEC) and its allies have agreed to proceed with plans to increase oil output by 400,000 barrels per day (bpd) as early as February. The decision was made due to expectations that Omicron would have a minor influence on the global economy and oil demand.

OPEC has been focusing on output recovery to pre-pandemic levels since imposing record production cuts of 10 million bpd in 2020. Reuters says that “certain member states continue to struggle with capacity restrictions” despite the acceptance of additional increases.

Saudi Arabia has been instrumental in increasing supply and meeting quotas in recent months, followed by Angola, the UAE, and Algeria, but attempts to increase production in several OPEC and non-OPEC countries such as Nigeria, Iran, and Libya have been hampered by underinvestment, limited exploration and drilling prospects, and political strife.

“Ongoing (oil production) outages in Libya, struggling production recovery in Nigeria, and reduced expectations for Russian production capacity add bullish weight to the scale from the supply side,” says Bjornar Tonhaugen, an analyst at Rystad Energy.

Despite these concerns, demand in the United States continues to rise, and the US government continue to compel the organisation to raise output.