Oil climbed by nearly $2 a barrel towards $72 on Monday on hopes the Omicron coronavirus variant would have a less damaging economic impact if its symptoms proved mostly mild and as the prospect of an imminent rise in Iranian oil exports receded.
Reports in South Africa said Omicron cases there had only shown mild symptoms and the top U.S. infectious disease official told CNN “it does not look like there’s a great degree of severity” so far.
Brent crude gained $1.83, or 2.6%, to trade at $71.71 per barrel, while U.S. West Texas Intermediate crude advanced $1.81, or 2.7%, to $68.07. Both benchmarks feel for a sixth week in a row last week.
“If Omicron is proven over the coming days – or weeks – to be less aggressive, even if it is more contagious, then we can say 100% last week’s lows were the bargain of the quarter,” said Jeffrey Halley, an analyst at brokerage OANDA.
The easing of Omicron fears boosted European equities and safer havens like bonds gave up some recent gains.
Brent has risen 38% this year, supported by output curbs led by the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, and recovering demand, although it has fallen from a three-year high above $86 in October.
OPEC+ decided last week to continue increasing monthly supply by 400,000 barrels per day in January, even after a slide in prices driven by Omicron concerns.
On Sunday, Saudi Arabia raised January official selling prices for all crude grades sold to Asia and the United States by up to 80 cents from the previous month.
Oil was also buoyed by diminishing prospects of a rise in Iranian oil exports after indirect U.S.-Iranian talks on saving the 2015 Iran nuclear deal broke off last week.