Oil prices rose almost 5% on Monday on hopes that a variant of the Omicron coronavirus would have a less damaging effect on the economy if its symptoms were mostly moderate and some OPEC member countries showed confidence in the market.
Reports from South Africa said cases of Omicron had only mild symptoms, and chief US infectious disease official Anthony Fauci told CNN that “there does not yet appear to be a high degree of severity”.
The White House said on Monday that President Joe Biden’s public health advisers were reviewing the US daily ban on foreign nationals from eight South African countries entering the country.
Brent crude oil rose $3.20, or 4.6 per cent, to $73.08 a barrel. US West Texas Intermediate crude rose $3.23, or 4.9%, to $69.49 a barrel.
Both indexes fell for the sixth week in a row last week.
“All the headlines today are optimistic,” said Ju Agri, senior analyst at อินโดนีเซียน เอxness. “The momentum seems to be returning.”
The global benchmark Brent benchmark is up 38% this year thanks to production curbs led by the OPEC producer group, although it fell from a three-year high of more than $86 in October.
Iraqi Oil Minister Ihsan Abdul-Jabbar said he expects oil prices to exceed $75, state news agency INA reported. He added that OPEC is trying to “positively contain” the energy market, INA reported.
Saudi Arabia on Sunday raised official selling prices for all grades of oil sold to Asia and the US by 80 cents in January compared with the previous month.
The OPEC group, which includes the Organisation of Petroleum Exporting Countries (OPEC) and allies including Russia, last week decided to continue increasing monthly supplies by 400,000 barrels per day (bpd) in January, even after prices fell due to Omicron fears.
Oil was also supported by dwindling prospects for Iranian oil exports after indirect US-Iran negotiations to salvage the 2015 Iran nuclear deal broke down last week.
Meanwhile, the World Petroleum Conference on Future Technologies and Carbon Reduction Strategies kicked off in Houston on Monday, with top energy executives confirming the need for oil in the coming decades.
“In fact, we are in a period of scarcity. And I think for the first time in a long time we will see a buyer looking for a barrel of oil rather than a barrel of oil looking for a buyer,” said Jeff Miller, chief executive of energy company Halliburton.