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Saudi Arabia Reassures Oil Markets about ‘Omicron’

Saudi Arabia Reassures Oil Markets about ‘Omicron’

Tuesday, 30 November, 2021 - 13:00
A general view of the Saudi capital Riyadh. (Reuters)

The Saudi Energy Minister, Prince Abdulaziz bin Salman, confirmed that the postponement of the technical meetings of OPEC+ came to secure more time to study the impact of the coronavirus variant “Omicron” on the markets.

However, the minister affirmed that the group was not “worried” about the virus variant.

Prince Abdulaziz bin Salman refused to comment on the plans of OPEC+ before its meeting this week.

Meanwhile, investment bank Morgan Stanley on Monday lowered its forecast for the price of Brent crude for the first quarter of 2022 to $ 82.50 a barrel from $ 95.

However, the bank raised its forecast for Brent price for the third quarter to $90 a barrel from $85.

In a new report on Monday, JPMorgan (JPM) said that Brent crude oil will hit $125 a barrel next year and $150 in 2023.

The hike of prices will take place if OPEC+ doesn’t raise the production of oil.

JPM said it believed that the world may need to stop the monthly increase in OPEC+ production by 400,000 barrels per day every month, for a period of 3 months during the first half of next year, to achieve market balance.

Reducing production may depend on the economic impacts of the new strains of the coronavirus.

There is concern that the new strain will impede the recovery path of the global economy, which may weaken the demand for oil, while fears of an oversupply in the first quarter of next year have also increased.

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.

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