Sources in the Organization of the Petroleum Exporting Countries (OPEC) and its allies and documents said that the group known as “OPEC Plus” postponed technical meetings to later this week to allow itself more time to assess the impact of the spread of the new “Omicron” Covid strain on oil demand and prices.
Oil prices, along with other financial markets, plunged more than 10% last Friday, recording the largest one-day decline since April 2020, after the discovery of a new strain of the Corona virus alarmed investors and boosted fears of a global oversupply inflation in the first quarter of Next year.
Friday's drop was exacerbated by a drop in liquidity due to a public holiday in the United States.
Before Friday, OPEC had already predicted that the surplus would grow sharply after the United States and other major consumers decided to release stockpiles of oil reserves to help cool prices.
Documents showed that OPEC Plus postponed the meeting of the Joint Technical Committee to Wednesday, instead of tomorrow, Monday, and OPEC will hold a meeting on the same day.
The documents showed that a joint ministerial monitoring committee will meet on Thursday instead of Tuesday, and that OPEC Plus will meet on the same day that a policy decision is likely to be announced.
"We need more time to understand what this new strain is, and whether or not we need to take strong action," an OPEC Plus source said.
OPEC Plus pumps 400,000 barrels per day of oil on a monthly basis, while limiting its record cuts that it approved since last year, when it reduced production by up to 10 million barrels per day to address the drop in demand caused by the closures due to the pandemic.
The OPEC Plus cuts are still valid at about 3.8 million barrels per day.
Some analysts indicated that the organization may stop pumping more temporarily with the release of oil stocks and the potential repercussions of demand after emergency closures to contain the new strain of the Corona virus.