By Adedapo Adesanya
Brent crude hit the $78 region on Monday following hopes that the Omicron COVID-19 variant will have a limited impact on global demand in 2022.
This development raised the price higher by $2.46 or 3.2 per cent to $78.60 a barrel and pushed the West Texas Intermediate (WTI) crude value higher by $1.78 or 2.4 per cent to $75.57 per barrel.
Though Omicron is spreading faster than any COVID-19 variant yet, the market is choosing to focus on the evidence that most people infected with it are showing mild symptoms.
Oil, which plunged by more than 10 per cent on November 26 when reports of a new variant first appeared, gained last week after early data suggested that Omicron could cause a milder level of illness.
The Brent has risen by more than 45 per cent this year, supported by recovering demand and supply cuts by the Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+.
Even as some countries entered a partial lockdown, the United Kingdom assured that it will not introduce new COVID-19 restrictions for England before the end of 2021, giving support to oil.
However, there was pressure in the US with more than 1,300 flights cancelled by US airlines on Sunday amid surging cases.
Also, COVID-19 reduced the number of available crews while several cruise ships had to cancel stops.
Market analysts noted that this is only likely to cause short-term nerves, with the global recovery story for 2022 still on track.
Talks also resumed between world powers and Iran on reviving Tehran’s 2015 nuclear deal on Monday.
The Middle-East producer said that oil exports were the focus of the talks, which so far appear to have made little progress on boosting Iran’s shipments.
With the recent developments, investors will be anticipating the next OPEC+ meeting on January 4, in which the producer alliance will decide whether to go ahead with a planned 400,000 barrels per day production increase in February.
OPEC+ stuck to its plans at its last meeting to boost output for January despite Omicron.
