The sport's showpiece event, which will run from July 31 to August 16 at its usual iconic home, is part of a Government-backed pilot along with Glorious Goodwood, part of an attempt to get fans back into stadia from October.
However, five-time world champion O'Sullivan said he was uncomfortable with the prospect of playing in front of crowds at the moment and he may even consider pulling out.
According to the Sun, he said: "If they start bringing in crowds in, even if it is only a couple of hundred, I wouldn’t feel good about that. And I think to the point where it would even affect my willingness to participate.
"I don’t think there should be any crowds in an indoor area until at least 2021 and, to me, it seems insane that we are even talking about it."
The legend, who has a record 19 Triple Crown titles to his name, needs just one more ranking crown to surpass the leading all-time mark of 36 that he currently shares with Stephen Hendry - and this would be the most fitting venue to achieve such a feat.
Assuming he participates and chases the first prize of £500,000, O'Sullivan is due to begin his campaign on Sunday August 2 against one of the tournament's qualifiers.
The statement from the Department for Digital, Culture, Media and Sport (DCMS) said the test events were taking place in order "to build up to and prepare for the full, socially distanced return of sporting events from October 1, 2020".
Sports minister Nigel Huddleston said: "For months, millions of us have felt the void of being unable to go to the match to support our team or attend a top-class sporting event. So I am pleased that we are now able to move forward with a plan to help venues safely reopen their doors to fans.
"I recognise that not every sport, team or club has the benefit of huge commercial revenue, and it is often their dedicated fans that are the lifeblood which helps keep them going. By working closely with sports and medical experts, these pilots will help ensure the safe return of fans to stadia.
"Although it will remain some time before venues are full to capacity, this is a major step in the right direction for the resumption of live spectator sport across the country."
Attendance at sporting events for the foreseeable future will be subject to a number of strict conditions.
These include venues being ordered to provide information on measures being taken to mitigate the risk of Covid-19 infection, a code of behaviour for spectators advising them to take a responsible approach, such as staying away if suffering from any symptoms of the virus, careful control of seat bookings to ensure social distancing is observed, providing alternatives to spectators to help them avoid using public transport and providing additional hygiene facilities.
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