Mike Muller, Head of Vitol Asia has said an OPEC+ meeting set for December 2, 2021 is likely to tread cautiously considering the emergence of the new South African COVID-19 variant which adds more strains to demand growth and a possible oil surplus.

Speaking at a Gulf Intelligence webinar, Muller said the Joint Ministerial Monitoring Committee will meet ahead of the OPEC+ meeting for early next month to discuss preliminary information about the new variant Omicron, according to sources close to S&P Global Platts.

“I’m not sure they are going to react with an about turn quite as quickly as this unless more information [about the new variant] comes to light. Will they err on the side of caution also? I think they might and that seems to be the consensus out there. They seem a lot more concerned about demand, about economic shocks… about economic growth in China and about stats from India.”
Mike Muller, Vitol

Following fears about possible new lockdowns due to the new variant, triggered an oil price crash. Based on S&P Global Platts assessment, Dated Brent sold at $73.27/b, the lowest in two months, after details of an omicron variant of the COVID virus emerged.

The meeting comes at a time when a US-led coordinated release of Strategic Petroleum Reserves has been triggered with the intention to tame high prices at US gas stations. This has been on account of US President Joe Biden blaming OPEC for the high oil and gas prices.

However, instead of depressing prices rather ratcheted them up higher, but the renewed COVID-19 concerns have now brought about President Biden’s objective.

China Refuses to Release Strategic Stocks

Regardless of the repeated talks, China has vehemently pushed back against President Biden’s calls to “do more” and stated it would coordinate its own releases of strategic stocks according to its needs, cooling down the enthusiasm of market bears.

“I think in a world without Omicron, we were looking at an ever-tightening supply picture where the world needed OPEC to put extra volume into the market.

“If they don’t and this turns out to be a false alarm, a false scare… and this virus doesn’t turn out to be of concern to energy demand, then the market needs ongoing supply.

“Global inventories are below pre-pandemic levels and investment hasn’t been as such in the global upstream, including shale, the fastest to respond sector, to allow a response if global demand were to see a resurgence early next year.”
Mike Muller, Head of Vitol Asia

Meanwhile, Iran’s Oil Minister, Khojasteh-Mehr is calling for $90 billion of investment in the oil sector, while $70 billion is also needed to develop gas fields.

He indicated during a conference that there exists different investment packages, while expecting that a big share of contribution for foreign investment.

“In this regard, we welcome foreign investment, but if it is not materialized, we have other options and scenarios and we will not waste our time,” he said.

Khojasteh-Mehr stated that the National Iranian Oil Company (NIOC) is also planning to boost the oil and gas industry’s export capacity to reach 1.5 times more than the pre-sanction levels over the next 10 years.