On Sunday, Saudi Arabia increased its official January selling prices for all raw grades sold to Asia and the United States by up to 80 cents from the previous month.
Oil prices rose more than $1 on Monday after leading oil exporter raised prices for crude it sells to Asia and the United States, and indirect US-Iran talks to revive the nuclear deal stalled.
Brent crude futures for February were up $1.39, or 2%, to $71.27 per barrel as of 0458 GMT, while West Texas Intermediate crude for January was up $1.40, or 2.1%, to $67.66 a barrel. .
Both benchmarks rebounded after falling for the first time since November 2018 for six weeks on concerns that the novel coronavirus variant Omicron could impact global economic growth and fuel demand.
The price increases were implemented despite the decision last week by the Organization of the Petroleum Exporting Countries and their allies, including Russia, to continue increasing supply by 400,000 barrels per day in January.
However, despite the planned increase, total production cannot increase as leading producers face technical difficulties in increasing production in accordance with the current agreement.
Prices, also rose as expectations for an increase in Iranian oil exports faded after indirect US-Iran talks on reviving Iran’s 2015 nuclear deal were cut off last week. Talks are expected to resume in the middle of this week.
While its severity has not yet been fully estimated, the new coronavirus variant Omicron is likely to lower global economic growth forecasts. Consulting JBC Energy revised its base-state crude demand outlook down by approximately 300,000 barrels per day in December and January. The revision removed most of the supply squeeze that the market had predicted.
As of Sunday, Omicron has spread to about one-third of US states.