Oil prices rebounded on Monday as investors scoured for bargains following Friday’s crisis and over speculation OPEC + could halt a production increase in response to the Omicron spread, but the mood remained cautious with little knowledge of the new variant.
Brent crude futures soared $ 3.11, or 4.3%, to $ 75.83 a barrel at 3:55 a.m. GMT, after falling $ 9.50 on Friday.
U.S. West Texas Intermediate (WTI) crude rose $ 3.47, or 5.1%, to $ 71.62 a barrel, after falling $ 10.24 in the previous session.
Oil prices plunged more than 10% on Friday – their biggest drop in one day since April 2020 – as the new variant scared investors in financial markets.
There are fears that the new variant could derail the global economic recovery, which could hurt demand for oil, while it also added to fears that an oversupply could swell in the first quarter.
“We saw some correction as Friday’s drop in oil prices was exaggerated,” said Tatsufumi Okoshi, senior economist at Nomura Securities.
“If the market continues to decline, OPEC + could suspend the planned increase in crude production to support prices,” he said.
The Omicron variant spread around the world on Sunday, with new cases found in the Netherlands, Denmark and Australia even as more countries imposed travel restrictions.
The World Health Organization (WHO) said it was not yet clear whether Omicron, first detected in southern Africa, was more transmissible or dangerous than other variants.
America’s top infectious disease official Dr Anthony Fauci told President Joe Biden on Sunday that it would take about two weeks to have definitive information on the Omicron.
The Organization of the Petroleum Exporting Countries and Allies (OPEC +) have postponed technical meetings until later this week, giving themselves more time to assess Omicron’s impact on oil demand and prices, according to reports. OPEC + sources and documents.
OPEC’s joint ministerial follow-up committee was postponed from Tuesday to Thursday. OPEC + will also meet on Thursday, when a political decision will likely be announced on whether to adjust its plan to increase production to 400,000 barrels per day in January and beyond.
Some analysts have suggested that the group may halt increases after the release of stocks by oil-consuming countries and the possible repercussions on demand of the new lockdowns to contain the new variant.
“All eyes will be on how the Omicron affects the global economy and fuel demand, the action of OPEC + and the Iranian nuclear talks this week,” said Hiroyuki Kikukawa, chief executive of research at Nissan Securities.
Talks on relaunching the 2015 Iran nuclear deal are set to resume in Vienna on Monday, as Iran’s atomic advances cast doubt on the possibility of a breakthrough to bring Tehran and the United States back into full compliance with the deal .