On Monday, crude oil prices recoup the losses seen on Friday as investors looked for bargains but remained cautious with the focus on the Omicron coronavirus variant and Iran nuclear deal negotiations.
By 00.14 GMT, Brent crude futures rose by 4.2% or USD3.05 to USD75.77/barrel after posting a USD9.50/barrel slump on Friday. US WTI jumped by 4.8% or USD3.27 to USD71.42/barrel after tumbling by USD10.24/barrel on the previous session.
On Friday, oil prices plunged, along with other financial markets, by the biggest one-day drop since April 2020 on the back of the new coronavirus variant which spooked investors and strengthen the anxiety that the first quarter of 2022 would see a supply surplus.
Analyst Hiroyuki Kikukawa of Nissan Securities commented, "There was correction buying on views that the oil market had been oversold last week and on speculations that OPEC+ may take a measure against the Omicron, potentially cutting output.”
Even as more countries reimposed travel restrictions, the Omicron coronavirus variant spread around the world on Sunday, with new cases found in the Netherlands, Denmark, and Australia. The new variant is still being studied on its transmission ability.
Due to the news of the new variant, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) has delayed its technical meeting planned for Tuesday to Thursday so that it has more time to assess the newest development.
OPEC+ would likely announce its decision regarding its plan to raise crude output by 400,000 bpd in January and beyond.
The recent release of the emergency crude reserves by some of the world’s biggest oil buyers and the prospect of damaged demand due to the newly-announced Omicront-lockdowns could be the factors the alliance needs to study.
Meanwhile, on Monday, the talks on reviving the 2015 Iran nuclear deal are scheduled to continue in Vienna. Iran's atomic advances raise doubt as to whether a breakthrough can be made to bring Tehran and the United States back into full compliance with the accord.
