Lukoil sees OPEC+ continuing current production policy

Russia's second-largest crude producer Lukoil expects the OPEC+ group to continue its current oil output policy, and increasing output by 400,000 b/d at its next meeting, the company's vice president Leonid Fedun told reporters Dec. 17.

"I don't see any deviations from the program that was previously adopted," Fedun said when asked about the decision he expects the group to take in January.

The OPEC+ group is next scheduled to discuss market conditions and output volumes at a ministerial meeting on Jan. 4.

On Dec. 13 OPEC increased it forecast for first-quarter demand to 99.13 million b/d -- up 1.1 mil b/d from its previous estimate. The group said the increase was due to expectations that the omicron variant of the coronavirus will have a transitory impact on the global economy.

At the last OPEC+ meeting on Dec. 2 the group agreed to continue with a planned 400,000 b/d production quota increase for January, despite speculation that the group would stall or reduce planned output increases amid concerns over omicron's impact on demand.

S&P Global Platts Analytics is currently forecasting that the group will freeze increases for February due to demand concerns.

The OPEC+ quota is currently the main driver of Russian output volumes.

Prices

Fedun also said he sees oil prices at $60-80/b throughout 2022.

"I expect that oil prices will be within a range that is comfortable for both consumers and producers. This is about $60-80/b. Short-term spikes are possible, but in general, this range will be maintained next year," Fedun said.

Dated Brent was assessed by S&P Global Platts at $74.76/b on Dec. 16, up 2.65% on the day, but down from $83.125/b on Nov. 24 when the first case of omicron was reported.

On Dec. 15 Lukoil said its 2022 program is based on a conservative oil price scenario of $50/b. It plans to present an updated strategy March 11.