Oil climbed amid broader market gains on reports that early cases of the omicron COVID-19 variant have been fairly mild, easing concern about a possible blow to demand. 

West Texas Intermediate rose 4.9 per cent to US$69.49 on Monday, a one-week high. Initial data on omicron from South Africa -- the epicenter of the outbreak -- doesn’t show a resulting surge of hospitalizations. Markets across the globe have been roiled since the variant emerged in recent weeks, prompting concerns about a potential hit to the economic rebound.  

“It seems Wall Street is optimistic that the growth story is still intact as omicron seems like it might be leading to less serious illness than delta,” said Ed Moya, senior market analyst at Oanda Corp.

White House medical adviser Anthony Fauci said Sunday that there doesn’t look to be a great degree of severity to the new strain, while cautioning it’s too early to be certain. Omicron has so far spread to at least 17 U.S. states.

Meanwhile, Saudi Arabia increased its oil prices for customers in Asia and the U.S. for January, just days after the OPEC+ alliance agreed to boost output for the same month. Prices for its high-sulfur barrels in Asia were the highest since at least 2000.

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The U.S. said over the weekend that chances of Iran rejoining the nuclear deal may be slipping away. The briefing was one of the most pessimistic American assessments of the negotiations yet, dampening any expectations of a quick return of Iranian oil to the market.   

While oil on Friday capped a sixth consecutive week of declines -- the longest stretch since 2018 -- it has begun to recover from the stark drop that began in late November, when omicron led to renewed restrictions on travel. OPEC+ decided to keep adding extra barrels to the market in January, but essentially put a floor under prices by giving itself the option to change the plan at short notice.

“The oil market seems to now be convinced that higher price levels are warranted and premiums are added to the bargains of last week,” Louise Dickson, a senior oil markets analyst at Rystad Energy, wrote in a note to clients. 


  • West Texas Intermediate for January delivery rose US$3.23 to settle at US$69.49 a barrel in New York.
  • Brent for February settlement rose US$3.20 to US$73.08 a barrel.

Saudi Aramco raised its key Arab Light grade for customers in Asia by 60 cents from December to US$3.30 a barrel above a benchmark, according to a statement from the state producer. That followed comments last week from Aramco Chief Executive Officer Amin Nasser that he was “very optimistic” about demand and that the market had overreacted to omicron.

Bids are due Monday for the first 32 million barrels of crude planned for release from U.S. government stockpiles. The release is part of the Biden administration’s effort to lower energy costs and tackle surging gasoline prices, which touched a seven-year high last month. Although winning bids won’t be announced until Dec. 14, at least two international oil refiners have expressed interested in the swap, according to people familiar with the matter.

Other oil-market news:

  • The U.S. Department of Energy urged major oil companies to increase energy-transition efforts or risk being left behind in a rapidly-changing clean economy.
  • Energy Aspects cut its global jet fuel and oil demand estimates for Dec. and Jan. as the spread of omicron leads to flight cancellations and travel restrictions, according to a note dated Dec. 2.
  • ConocoPhillips unveiled a US$1 billion variable dividend as the second-largest driller in the Permian basin aims to boost investor returns in the new year.