A Combination of Factors Affected Oil Prices

A combination of factors helped to boost oil prices on Monday. Oil gained 2$ a barrel toward $72 on hopes the Omicron coronavirus variant would have a less damaging economic impact if its symptoms proved mostly mild and the prospect of an impending rise in Iranian oil exports receded.

 Hopefully, Anthony Fauci stated that “it does not look like there’s a great degree of severity” so far.

 On Monday, Brent crude added $1.85 or 2.7% to $71.73 by 11:35 GMT. The West Texas Intermediate (WTI) crude gained $1.92 or 2.9% to $68.18. 

The easing of omicron fears helped to boost European equities as well as safer havens like bonds gave up some recent gains.

Oil industry and its challenges

The price of Brent jumped 38% in 2021. Its price rose thanks to output curbs led by OPEC and its allies and recovering demand. Although Brent fell from a three-year high above $86 in October.

 The Organization of the Petroleum Exporting Countries and its allies decided last week to continue increasing monthly supply by 400,000 barrels per day in January. President Joe Biden wanted to increase production, but OPEC and its allies are not ready to change their plans. 

Last week, a major oil producer raised January official selling prices for all crude grades sold to Asia. Moreover, the U.S. Saudi Arabia increased official selling prices by up to 80 cents from the previous month. 

The situation regarding the 2015 Iran nuclear deal continues to dominate the headlines. According to a senior U.S. State Department official Iran abandoned any compromises it made in talks to revive its nuclear deal with major powers. Iran’s position during the first such talks in several months disappointed not just the U.S. but other countries as well.