Saudi energy minister says too early to tell omicron’s impact on oil demand

Saudi energy minister says too early to tell omicron’s impact on oil demand
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Updated 30 November 2021

Saudi energy minister says too early to tell omicron’s impact on oil demand

Saudi energy minister says too early to tell omicron’s impact on oil demand
  • OPEC and its partners (OPEC+) has moved its joint technical committee meeting to Wednesday

DHARAN: The impact of omicron, a new variant of the coronavirus, on oil demand is not clear yet, Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman said. 

The Organization of the Petroleum Exporting Countries and its allies, a grouping called OPEC+, has moved its joint technical committee meeting to Wednesday and the joint ministerial monitoring committee meeting to Thursday to have more time in assessing the new variant’s impact, the energy minister told Arab News on the sidelines of an Aramco ceremony in Dhahran.

When asked whether OPEC+ will change a production target of 400,000 barrels per day of oil per month due to the virus, he said “let’s keep everyone on their toes and nails.”

“According to what is coming from the World Health Organization there are exaggerations ... but I believe that the decision we took will enable us to at least gain time to better study the matter even if with limited knowledge,” Reuters quoted him as saying.

OPEC+ has some 3.8 million bpd of cuts still in place and some analysts have suggested the group could pause its output increases.

Russian Deputy Prime Minister Alexander Novak was quoted as saying on Monday that he sees no need for urgent action on the oil market over omicron, downplaying the possibility of changes to an OPEC+ oil supply deal this week.

“There is no need for hasty decisions,” Novak was quoted as saying by the Interfax news agency. His comments were confirmed by his spokesperson.

“We will additionally discuss with the OPEC+ countries the market situation and if any measures are warranted,” Novak said, according to the spokesperson.

This week’s meeting will discuss January’s output.

Novak said OPEC+ partners had not asked to renegotiate their current deal in response to omicron.

Before Friday’s crash, OPEC had already predicted the market’s surplus would grow steeply after the US and other major consumers decided to released oil stocks to help cool down prices.

The stocks release was decided after OPEC+ resisted US calls to pump more oil to reduce oil prices.

The US said it would release millions of barrels of oil from strategic reserves in coordination with China, India, South Korea, Japan and Britain to try to cool prices.

Analysts said the effect on prices was likely to be short-lived after years of declining investment and a strong global recovery from the COVID-19 pandemic.

The coordinated release could add about 70 million to 80 million barrels of crude supply, smaller than the more than 100 million barrels the market has been pricing in, analysts at Goldman Sachs said.