All eyes will be on how Omicron will affect the global economy and fuel demand, the OPEC+ action and the Iran nuclear talks this week.
Oil prices rallied on Monday as investors sought bargains after Friday’s slide and speculated that OPEC+ could pause production growth in response to the Omicron spread.
Brent crude futures were up $3.11, or 4.3%, to $75.83 a barrel as of 0355 GMT, after falling $9.50 on Friday.
West Texas Intermediate (WTI) crude was at $71.62, up $3.47, or 5.1%, after falling $10.24 in the previous session.
Oil prices fell more than 10% on Friday, the biggest one-day drop since April 2020, scaring investors in volatile financial markets.
The fact that the new variant could derail the global economic recovery and potentially hurt oil demand has raised concerns that oversupply could increase in the first quarter.
There has been some recovery after Friday’s extreme oil price plunge. However, if the market falls further, OPEC+ could halt the planned increase in crude oil production to support prices.
The Omicron variant is spreading around the world, new cases have been found in the Netherlands, Denmark and Australia, with the number of countries imposing travel restrictions on the rise.
The World Health Organization (WHO) said it was not yet clear whether Omicron, first detected in South Africa, is more contagious or dangerous than other variants. It is said that it will take about two weeks to have definitive information about Omicron.
According to sources and documents, OPEC+ has postponed technical meetings until later this week to have more time to assess Omicron’s impact on oil demand and prices.
OPEC’s joint ministerial monitoring committee has been postponed from Tuesday to Thursday. OPEC+ will also meet on Thursday, when a policy decision will be announced on its plan to increase output by 400,000 bpd in January and beyond.
OPEC+ and analysts are agreed on watching carefully the oil consuming countries’ oil stock release and the possible repercussions of new lockdowns on prices.
Iran’s atomic moves cast doubt on whether a breakthrough can be made in bringing Tehran and the United States into full compliance with the agreement.
Talks on reviving the 2015 Iran nuclear deal will continue in Vienna on Monday.
