Oil Steady As Supply Disruptions Offset Omicron Fears

  • Oil prices declined on Monday as supply disruptions in Kazakhstan and Libya weren’t enough to offset worries stemming from the rapid global rise in Omicron infections. Brent crude fell $1.00, or 1.22%, to $80.78 per barrel, and U.S. West Texas Intermediate (WTI) crude was down $0.84, or 1.06%, to trade at $78.07 per barrel. 
  • Oil prices gained 5% last week after protests in Kazakhstan disrupted train lines and hit production at the country’s top oilfield Tengiz, while pipeline maintenance in Libya pushed production down to 729,000 barrels per day from a high of 1.3Mn bpd last year. 
  • The fall of Azeri crude oil exports from Turkey’s Ceyhan port lent some support to prices. Oil is also drawing support from rising global demand and lower-than-expected supply additions from the Organization of the Petroleum Exporting Countries, Russia and allies, or OPEC+. OPEC’s output in December rose by 70,000 bpd from the previous month, versus the 253,000 bpd increase allowed under the OPEC+ supply deal which restored output slashed in 2020 when demand collapsed under COVID-19 lockdowns. 
  • A surge in COVID-19 infections, however, put pressure on oil prices. Despite early studies showing a lower risk of severe disease or hospitalisation from Omicron compared to the previously dominant Delta variant, healthcare networks across Spain, Britain, Italy, and elsewhere have found themselves in increasingly desperate circumstances.

(Source: CNBC News)