Omicron and the Dispute between OPEC+ and Biden

In this interview with Cyba Audi from Asharq Business Bloomberg, Christof Rühl, member of the Advisory Board of Crystol Energy and a Senior Fellow at the Center on Global Energy Policy at Columbia University, comments on the outbreak of the Omicron variant and the recent tensions between US President Joe Biden and OPEC+.

On the emergence of the Omicron variant, Christof states that scientists have already been warning of possible mutations of the Covid-19 virus. However, even if the variant proves to be dangerous, the possibility of the implementation of new lockdowns measures is highly unlikely. This problem will mostly increase the divergence between the vaccinated and non-vaccinated people in both the developed and developing economies. The key is to ramp up vaccination in all parts of the world equally to avoid the rapid spread of new strains, which could be immune to the current vaccines, to other parts of the world. 

Christof further highlights that the release of the US Strategic Petroleum Reserve (SPR) portrays an absence of competence in the US energy policy under the Biden administration as the impact of such a step on the oil markets has been minimal and there is a global consensus on this matter. On the other side, OPEC+ has been accurate enough in forecasting oil demand and disciplined enough in introducing oil barrels to the market. With both pulling the rope towards their side, it is most likely that after the Omicron variant, Biden will halt his SPR decision or else OPEC+ will refrain from introducing additional barrels to the market.

He concludes that we have to be careful when predicting oil price movements. In the recent drop in oil prices, the markets have exaggerated in factoring in the risk of the Omicron variant. The picture is still not clear, and the weeks ahead will give direction to how the market will move.