Decision by OPEC +: Oil output will be increased slightly

Despite global concerns about the new Omikron coronavirus variant, OPEC + want to stick to their planned production increase. This was announced by the Alliance of Oil States. What are the consequences for the oil price?

After all: at Germany’s gas stations, gasoline prices have fallen again for a long time. This is what the automobile club ADAC writes in its weekly evaluation of the prices at 14,000 petrol stations, but also points out that November brought new annual highs overall. But the oil price dropped by 15 percent in just seven days, which was noticeable when refueling.

OPEC is troubled by three factors

The reason for the recent drop in prices is the uncertainty surrounding the new Omikron virus variant. But that should pass, experts believe: “We are assuming that this new Covid variant should at best have a short-term impact on demand,” says raw materials analyst Thomas Benedix from Union Investment. “The risks to demand are already priced in at $ 70 per barrel of oil.”

And the oil-exporting countries could easily live with this price. Because currently the environment is anything but easy, says Benedix. “At the moment, OPEC is struggling with three things: the seasonal decline in demand, the partial dissolution of strategic reserves in some countries and the uncertainty in demand due to the new Omikron variant.”

Price increase, yes – but not so steep anymore?

Nevertheless, the oil alliance Opec + decided at its meeting to stick with the planned slight increase in oil production, which initially caused the oil price to fall as a reaction. But it seems to assume that demand will rise again in the coming year. Consumers have to be prepared for significantly rising heating costs anyway: “The price increase that we are currently seeing on the market will be felt by consumers next year with their heating bills,” says Tanja Loitz, managing director of the non-profit climate protection consultancy co2online. “We are currently assuming that if you heat with heating oil, it will amount to 44 percent.”

After all, a quarter of German households still heat with oil, and around half heat with gas. But they can also expect an increase of up to 20 percent, as the comparison portal Verivox has calculated. The good news is that there will not be such a sharp rise in oil prices as this year in the coming year. Because in 2019 the oil price was at an extremely low level due to global lockdowns and collapsed demand.

Fuel is expected to become more expensive

Looking ahead to the coming year, gasoline is likely to become more expensive at German filling stations, analyst Benedix predicts. And that has more political reasons, because: “Over two thirds of the gas station price is due to taxes and charges in Germany,” said the expert. “And with the CO2 pricing, which gets a little higher every year, there is an additional surcharge on the petrol and diesel price at the petrol station.”

The CO2 tax that came into force this year is expected to increase the price of every liter of petrol by 15 cents by 2025. This is politically wanted in order to promote the phase-out from fossil fuels. The consumer portal Co2online advises to pay more attention to the topic of energetic renovation – this not only saves CO2, but also money. And so it is not only the world markets that have an impact on heating and petrol costs.