Oil Price Forecasts Complicated Amid Omicron Variant Impact... OPEC+ Meeting Also Postponed (Update)

Brent Oil Rebounds After Sharp Drop... Starts Up 3.46%
Major Middle Eastern Markets Plunge Together... Variant Concerns Persist
"If Variant Impact Is Limited, $100 Per Barrel Possible"

[Image source=AP Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] As concerns over reduced demand due to the spread of the COVID-19 Omicron variant caused major Middle Eastern oil-producing countries' stock markets to plunge simultaneously, international oil prices, which had crashed last weekend, are now showing signs of rebound.

With the direction of international oil prices becoming difficult to predict, the oil-producing countries' consortium OPEC Plus (OPEC+) has urgently postponed its production adjustment meeting. It is expected that international oil prices will continue to fluctuate depending on the spread and impact of the Omicron variant in the future.

According to Bloomberg News on the 28th (local time), major Middle Eastern oil-producing countries' stock markets all sharply declined that day. Saudi Arabia's Tadawul Index closed at 10,787.79, down 4.53% from the previous session, while other major Middle Eastern stock markets such as Dubai's DFM Index (-5.2%) and Abu Dhabi's ADX General Index (-2.3%) also experienced significant drops.

On the other hand, international oil prices, which had sharply fallen on the 26th, are showing signs of recovery. On that day, Brent crude oil from the North Sea opened at $74.07 on the London ICE Exchange, up $2.48 (3.46%) from the previous session. This followed an 11.53% plunge on the 26th due to the impact of the COVID-19 Omicron variant, marking a successful rebound.

With conflicting indicators making it difficult to gauge the future direction of international oil prices, OPEC+ member countries announced that they would postpone the production adjustment meeting originally scheduled for the 2nd of next month by two days. Major foreign media quoted OPEC+ sources saying, "OPEC+ postponed the Joint Technical Committee meeting from the 1st to the 3rd and the ministerial meeting for production adjustment from the 2nd to the 4th by two days each," adding, "They decided to take more time to analyze what the newly spreading Omicron variant is and whether proactive measures are necessary."

It is expected that the direction of international oil prices will be determined based on the actual impact of the Omicron variant going forward. John Kilduff, an analyst at the U.S. investment firm Again Capital, said in an interview with Bloomberg News, "With the earlier announcement of the U.S. strategic petroleum reserve release coinciding with the impact of the Omicron variant, there is a higher possibility that OPEC+ will further reduce the existing monthly production increase of 400,000 barrels," adding, "If OPEC+ implements additional production cuts while the Omicron variant's damage remains limited, international oil prices could rebound again and approach $100 per barrel."