International oil prices are changing rapidly with the appearance of ‘Omicron’, a new variant of the novel coronavirus infection (COVID-19). International oil prices, which had been on the rise despite news of the release of strategic oil reserves by major consuming countries, including the United States, turned to a sharp decline due to concerns about the spread of Omicron. In particular, just before the advent of Omicron, there is a subtle tension between oil producing countries and consuming countries that have been at odds over increased production, and international oil prices are flowing into a phase where it is impossible to predict even one inch ahead. Oil producing countries, which have shown resistance to the measures taken by consuming countries to release oil from their stockpiles, are somewhat relieved from pressure to increase production with the advent of Omicron. However, the US side said that despite the downward trend in international oil prices on Omicron, the release of oil reserves will proceed as scheduled, and the conflict over international oil prices appears to be ongoing.
According to the New York Mercantile Exchange (NYMEX) on November 30 (local time), West Texas Intermediate (WTI) for delivery in January next year finished trading at $66.18 per barrel, down 5.4% ($3.77) from the previous trading day. On this day, American pharmaceutical company Moderna CEO Stefan Bansel said through the Financial Times that “(existing vaccines) are likely to be less effective on Omicron than delta mutations,” appearing to stimulate market anxiety. Uncertainties in international oil prices have increased as concerns over the spread of Omicron mutations began on the 26th of last month. Compared to the first trading day in November ($82.45), it has fallen by a whopping 20% until the last trading day, and has plummeted by nearly 16% in the last week.
The sharp drop in oil prices due to the spread of Omicron mutation is an unexpected change in both oil producing and consuming countries that have been ‘smuggled’ over increased production. On the 23rd, the White House of the United States ordered the release of 50 million barrels of oil from the oil reserves to control oil prices, and South Korea, China, Japan, India and the United Kingdom also decided to participate in the release of oil reserves according to the proposal of the United States. Nevertheless, on the day of the announcement, oil prices rose by more than 2%, raising questions about the effect of releasing oil from the stockpile.
Industry insiders and outsiders are predicting that this sharp drop in oil prices will be beneficial to oil-producing countries. OPEC+ (OPEC+), a consultative group of oil-producing countries other than the Organization of Petroleum Exporting Countries (OPEC), watched the oil price movement until it postponed the meeting to decide the oil production policy. OPEC+, which is adopting a policy to increase production by 400,000 barrels a day, has received a request for an additional increase from the US, but the drop in oil prices gave a good reason to reject the request. Bloomberg News, citing an official from OPEC+, said, “Oil producing countries such as OPEC and Russia are likely to withdraw their plans to increase production,” while the White House in the United States maintained a confrontation with oil producing countries, expressing their will to continue releasing oil reserves regardless of this move. are doing
The domestic industry is closely monitoring whether oil producing countries adjust their production and the resulting oil price flow. The recent drop in international oil prices is expected to be reflected in domestic oil prices in two to three weeks. In this case, it is predicted that the price of oil, which has fallen due to the government’s oil tax cut, will fall further. However, in the case of the domestic oil refining industry, the profitability of the domestic oil refining industry is burdensome as the refining margin, which reached $8 a barrel a month ago, has recently fallen to $3 a barrel. Cho Sang-beom, head of the Korea Petroleum Association, predicted, “Oil prices will depend on whether OPEC+’s production decisions and uncertainties over micron mutations are resolved.”
Kim Hyung-jun reporter email@example.com
Balance to see the world, Hankook Ilbo Copyright © Hankookilbo