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Illustration: Sarah Grillo/Axios

The OPEC+ decision to forge ahead with output hikes next month can't be untethered from U.S. politics or uncertainty about the Omicron variant.

Catch up fast: OPEC, Russia and allied producers met virtually Thursday and stuck with plans to increase production by 400,000 barrels per day in January.

  • But in an unusual move, the group has technically held the meeting open to enable them to revisit the decision on the fly.

Why it matters: The production increase — if it holds — is likely to help keep crude prices in the lower range they've been at lately after October saw Brent crude rise above $85 per barrel (it's at almost $72 Friday morning). That should bring down gasoline prices that have already fallen slightly in recent days.

What they're saying: "The pandemic has demonstrated that it can strangle oil demand at will. OPEC is smart to prime its membership for the possibility of a U-turn," Rice University energy expert Jim Krane tells Axios via email.

  • "But a change in strategy right away might’ve unduly upset the Biden administration and made the Saudis look a bit tone-deaf," Krane adds.
  • "It would’ve also signaled that the Saudis and Russians were keen to protect the $70-$80 price band, which would probably unleash a whole bunch of U.S. shale production."

Between the lines: The decision comes despite the White House move to release oil from strategic stockpiles and analysts estimates that markets will soften next year.

  • RBC Capital Markets analysts called the OPEC+ decision a "victory" for the Biden administration, which has called for more output and has been scrambling to contain the political fallout from elevated gasoline prices.
  • They write in a note that "non-market factors likely played a role" and that there may be "geopolitical pay off coming" for Saudi Arabia, perhaps via more assistance against missile and drone attacks coming from Yemen.

The intrigue: Another read of the decision is that OPEC+, while hedging its bets, doesn't see Omicron as a rerun of the way COVID throttled demand in 2020.

  • "I see OPEC+'s decision to stick with its planned output increase as a signal of the group's optimism in the global economy and oil demand in 2022," oil analyst Ellen Wald tells Axios via email.
  • "They are looking past the financial noise associated with fear and panic over the omicron variant and new travel restrictions to larger economic signals," she said.
Data: FactSet; Chart: Thomas Oide/Axios

There have been plenty of whiplash moments in oil markets lately as traders weigh the economic recovery, threats from the Omicron variant and White House plans to release oil from strategic reserves.

The big picture: Rystad Energy analyst Louise Dickson, in a note, said news about vaccine efficacy against Omicron is helping to pull prices upward. But Dickson also cautions:

  • "Once the Omicron variant is discovered in China, its zero tolerance COVID-19 policy could put a rapid halt to oil products demand, potentially sending oil much closer to $60 per barrel Brent than $70 Brent."

Go deeper: Oil-and-gas leasing plan shows climate agenda's limits

Go deeper

COVID cases soar by more than 200%

Expand chart
Data: N.Y. Times; Note: Maryland case counts may be lagging due to ongoing technical issues; Cartogram: Kavya Beheraj/Axios

The number of new COVID cases more than tripled over the past two weeks, shattering records all across the U.S.

Why it matters: The Omicron variant appears to be significantly milder than its predecessors, and it's not leading to as much serious illness. But sky-high case counts are still a warning sign, especially in areas whose health care systems are already stretched thin.

Inflation microcosm: Used-car price surge continues

Data: U.S. Bureau of Labor Statistics via FRED; Chart: Axios Visuals

Consumer Price Index data released Wednesday showed used-vehicle prices continue to surge. As of December, they were up 37% compared to the previous year.

Why it matters: Analysts have been watching used-vehicle prices as a microcosm of the broader U.S. inflation story, encompassing both the disarray of global supply chains and the surge in demand for goods.

Updated 6 hours ago - Energy & Environment

Bomb cyclone prompts blizzard warnings from Virginia to Maine

Computer model projection showing the intense storm off of Cape Cod on Jan 29, 2022, with heavy snow and strong winds lashing the coastline. (Weatherbell.com)

Blizzard warnings are in effect for 11 million people from coastal Virginia to eastern Maine as a historic winter storm is set to slam the Mid-Atlantic and Northeast beginning Friday.

Why it matters: The storm will bring hazards ranging from zero visibility amid hurricane force wind gusts and heavy snow, to coastal flooding that will erode vulnerable beaches and threaten property from the Jersey shore to coastal Massachusetts.