OPEC+ is monitoring developments regarding the coronavirus variant that is emerging according to sources on Friday. Some have expressed concerns that it could alter the outlook for oil markets less than a week prior to the next meeting to decide on guidelines.
The Organization of the Petroleum Exporting Countries and their allies, also known by the name of OPEC+, is already experiencing a stock-release of its oil, a move led by United States to try to lower prices. A source confirmed that Russia is a major OPECPlus member is not worried about the virus’s variant at this point.
OPEC+ has resisted U.S. demands to take action to reduce prices for oil, and has continued to ease the record production curbs of last year by increasing supply by 400,000 barrels each day since August. Next week’s meeting will be discussing January’s production.
Global authorities expressed alarm to the news that the B.1.1.529 variant and India, the EU, Britain and India among those that have announced stricter control of borders. Oil dropped over 10%, which is the highest one-day drop since the beginning of April in 2020.
“Not good as it adds bearishness to an already weak outlook,” said an OPEC delegate about the new variant, asking not to be identified. Another said this could be the case, although it was too early to say.
OPEC+ meets on Dec. 2 to discuss the output policy. Another source stated that the group will assess the importance of the option in the market.
Sources have reported they believe that the OPEC panel that is a source of advice for ministers and has met this week, sees the U.S.-led oil stock release as adding to the supply surplus that OPEC has warned of in the coming year. Read more
Another OPEC delegate, despite noting the drop in the price of oil on Friday, stated that it was not clear what impact the change could have. Oil demand is recovering and is anticipated to be able OPEC for a return its pre-pandemic levels of 100 million bpd by 2022.
“I am very concerned,” he said. “There are many unknowns at the moment.”
Prior to Friday’s date, OPEC+ sources said the group was not discussing the possibility of putting off their planned output increase in January. Iraq declared on Thursday that OPEC+ should stick to the current plan.
A source with knowledge of Russian thought on Friday sounded down the alternative.
“I believe that the panic on the market because of the new COVID version should calm down,” the source said. “The OPEC+ participants should…not chase after the speculators.”
(Adapted from NDTV.com)