Saudi Arabia argued against producing more oil due to new Covid-19 lockdowns. Credit: drpepperscott230 from Pixabay.

Oil prices have declined prior to the restart of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, meeting on February output levels.

For March, Brent crude futures slipped $0.12 to $50.97 a barrel while US West Texas Intermediate crude for February stood at $47.56 a barrel, down by $0.06, Reuters reported.

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After OPEC+ could not agree on changes to February’s oil output, both contracts declined more than 1% on 4 January.

Deadlocked discussions between major producers regarding potential changes in output for next month are set to continue later today.

Due to new Covid-19 lockdowns, Saudi Arabia argued against producing more oil while Russia led calls for increased production, citing recovering demand.

Rystad Energy oil markets analyst Louise Dickson was quoted by Reuters as saying: “OPEC+ drama is, of course, steering the latest oil price downgrade, but the heavier hand is likely the still unknown impact of the new strain on economic activity and travel – both factors that warrant a belated mini-price correction after the winter holidays.”

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UK Prime Minister Boris Johnson announced new lockdown following an increase in the number of Covid-19 cases due to the emergence of a transmissible coronavirus variant.

The lockdown is expected to continue possibly until mid-February to reduce infection rates.

Amid a dispute between Tehran and Seoul over the freezing of Iranian funds in South Korean banks due to US sanctions, a South Korean-flagged tanker was seized in Gulf waters.

These increasing tensions in the Middle East offered some support to oil prices.