OPEC+ postponed a meeting to decide whether to withdraw its production plan in the aftermath of the Omicron variant.
Reuters reported on the 29th (local time) that ministers from OPEC+ postponed the meeting originally scheduled for the 29th to 30th of this month to evaluate the Omicron mutation virus that spread in the oil price market.
“We decided to postpone the meeting to evaluate how it affects the market situation,” a source said in an interview with TASS. Deputy Prime Minister Alexander Novak, a former Russian energy minister, also said OPEC+ has postponed its monitoring committee to the 2nd of next month.
The OPEC+ meeting will be held in the order of a joint technical committee meeting, a ministerial meeting, and a monitoring committee that submits the results of the ministerial meeting to finalize changes.
It is the final decision by discussing with the Joint Technical Committee whether to withdraw the oil production plan in the aftermath of Omikron through ministerial talks and submitting the results to the monitoring committee.
Earlier, foreign media reported that the Omicron mutation virus spread to the Netherlands, Denmark, and Japan, starting with South Africa, and oil prices plunged more than 10% after news broke that the U.S. and Britain introduced containment measures such as entry restrictions.
Since the World Health Organization (WHO) designated the Omicron mutant virus as a “concern strain” on the 26th, West Texas crude oil (WTI) plunged 13.06% in January on the New York Commercial Exchange (NYMEX), and Brent oil prices for January fell 11.35%.
It is interpreted that oil prices have fallen as demand for containment policies such as entry restrictions is expected to decrease.
This also raised the possibility of OPEC Plus withdrawing its daily increase of 400,000 barrels per month on average.
A senior OPEC+ official said, “As oil prices show the worst plunge due to the emergence of Omikron, we are expected to withdraw our production plans at next week’s meeting,” while ING strategists also said, “In the aftermath of Omicron, oil exporters are expected to stop their plans at this meeting.”
Ole Hansen, head of product strategy at Saxo Bank, said it could decide on a temporary cut in production not only for the aftermath of Omicron but also for the balance of falling oil prices.
Some argue that OPEC+ has considered suspending production since then, dissatisfied with major oil consumer countries such as the U.S., the U.K., India, South Korea and Japan’s decision to release strategic stockpiles to stabilize soaring oil prices.In this situation, it is interpreted that the emergence of Omicron added justification to OPEC+’s decision to stop increasing production.