OPEC+ Meets Omicron: A New Variant Clouded the Oil Supply Decision
The Associated Press reports that in Washington In the shadow of a new COVID-19 threat, OPEC and its allies in the oil-producing world will meet on Thursday to discuss how much oil to pump to a world paying more for gasoline. The omicron variant’s impact on the global economic recovery hangs over their decision on how much oil to pump.
As gas prices continue to rise, OPEC countries and their allies, led by Saudi Arabia and Russia, will meet online and decide whether or not to continue with their pre-omicron plans for modest monthly increases in oil releases or to scale back those planned upticks.
Countries imposed travel restrictions when the fast-mutating variant emerged late last week. After some pandemic restrictions were eased, Americans were able to enjoy a nearly normal Thanksgiving.
With the discovery of omicron, the price of a barrel of benchmark U.S. crude dropped. At $78 a barrel a week ago, it was trading at around $67 a barrel this morning. Brent crude, the international standard, fell from $79 per barrel a week ago to $70 on Wednesday.
Saudi Energy Minister Abdulaziz bin Salman told the Saudi newspaper Asharq al-Awsat that he was “not worried” about the impact of the little-known variant on oil demand earlier this week.
A meeting of the Organization for the Petroleum Exporting Countries (OPEC) was temporarily postponed this week, in order to gather more information about whether or not the variant is likely to re-ignite pandemic lockdowns or leave markets relatively unaffected.
An OPEC+ alliance—made up of OPEC members and non-members like Russia—is expected to take a cautious approach Thursday, cutting the amounts of their planned releases only slightly, if at all, pending more information on the new variant from medical experts.
Rystad Energy senior oil market analyst Louise Dickson said that OPEC+ is willing to wait for more data on the effectiveness of current vaccines before making any significant changes to its output strategy.
Foreshadowing the meeting, omicron had emerged as an unwelcome addition to the growing dispute between the world’s producers and consumers of energy, as demand for oil has risen sharply since the pandemic downturn and global economic growth has begun to recover.
Angry at the United States and its allies, the Organization of the Petroleum Exporting Countries (OPEC+) has remained steadfast in its plan to gradually reopen the petroleum supply, even as oil prices have soared to seven-year highs.
Vice President Joe Biden’s announcement last week that the United States and other nations would release millions of barrels of oil from their long-term strategic reserves was a response to OPEC’s refusal to increase supplies more quickly, which was putting him under pressure at home.
The emergence of Omicron has thrown those forces into disarray.
White House press secretary Jen Psaki told reporters on Wednesday that she was unaware of any plans to slow strategic reserve releases in light of the variant’s appearance.
While Biden was in the UAE and Saudi Arabia, senior energy adviser Amos Hochstein was on the ground, meeting with officials and discussing the need for cooperation in the move toward cleaner energy. A meeting between Saudi Arabia’s energy minister and Hochstein took place on Tuesday.
Psaki said, “We continue to convey that we are hopeful that they will release supply to meet the demand out there in the marketplace.
Bussewitz was in New York at the time of the story’s publication. From New York, Charles Sheehan of the AP contributed.
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