LONDON. OPEC and its allies begin two-day meetings on Wednesday to decide whether to release more oil to the market or restrict supplies amid plummeting oil prices and fears that the Omicron variant of the coronavirus could weaken global energy demand.
Oil prices fell to nearly $ 70 a barrel on Tuesday from $ 86 in October, the largest monthly decline since the start of the pandemic, as the new option sparked fears of oversupply.
In November, the price of Brent fell 16.4 percent and the price of WTI crude oil fell 20.8 percent, the largest monthly drop since March 2020.
“The threat to oil demand is real,” said Louise Dixon, senior oil analyst at Rystad Energy. “Another wave of lockdowns could lead to a decrease in oil demand to 3 million barrels per day in the first quarter of 2022.”
Federal Reserve Chairman Jerome Powell, also weighing on prices, said the US central bank is likely to discuss accelerating the decline in bond purchases amid a strong economy and expectations that inflation will continue to rise.
The Organization of the Petroleum Exporting Countries (OPEC) will meet on Wednesday after 13:00 GMT, followed by an OPEC + meeting on Thursday, which brings together OPEC with allies, including Russia.
Several OPEC + ministers, including those from Russia and Saudi Arabia, said there was no need for a harsh reaction from the group.
But some analysts have suggested that OPEC + may postpone plans to add 400,000 barrels per day (barrels per day) to deliveries in January.
The group was already weighing the implications of last week’s announcement by the US and other countries to release emergency crude oil reserves to contain energy prices.
OPEC + is gradually cutting back on record 10 million barrels per day supply cuts made last year, and currently the cut is about 3.8 million barrels per day.
OPEC’s increase in oil production in November again led to a slowdown in growth planned under an agreement with allies, according to a Reuters study.