Oil prices extended their gains to more than 3%, during Monday’s trading, with Brent crude rising above $72, after Saudi Aramco, the largest oil exporter, raised the official selling prices for its crudes to Asia and the United States, during the month of January.
The price hike came as indirect talks between the United States and Iran on reviving a nuclear deal reached a dead end, impeding the access of Iranian oil, which is subject to US sanctions, to global markets.
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The price of futures contracts for West Texas Intermediate crude – January delivery – increased by 3.2%; equivalent to $2.1, recording $68.39 a barrel.
The prices of Brent crude futures contracts – February 2022 delivery – also rose by 3.2%; That is equivalent to $2.1 recorded at $72.14 a barrel.
Oil prices fell by 2.4% and 2.8% for Brent and WTI, respectively, during last week’s transactions, to be the sixth consecutive weekly decline, for the first time since November 2018.
Saudi Aramco decided on Sunday to raise the official selling prices for the month of January for all grades of crude sold to Asia and the United States by up to 80 cents from the previous month.
The price increase by Aramco came despite the decision of the Organization of the Petroleum Exporting Countries (OPEC) and its external allies led by Russia, in the OPEC+ alliance, to continue increasing monthly supplies by 400,000 barrels per day during January.
Prices boosted as prospects for an increase in Iranian oil exports dwindled after indirect US-Iranian talks on reviving the 2015 Iran nuclear deal stalled last week.
Iran says the main challenge to the agreement is the United States’ reluctance to lift all sanctions, while Western powers have questioned Tehran’s determination to revive the agreement, and talks are expected to resume this week.
GBC said that while the “OPEC +” alliance confirmed that the decision was based on market fundamentals; It is difficult not to see the hand of the United States playing its role, especially given the visit of an American delegation this week to the kingdom, Reuters reported.
She added, “The Iranian situation was almost certainly discussed, and Saudi Arabia’s agreement to increase production suggests that a compromise has been reached and that an improvement in relations with the Biden administration is imminent.”
The consultancy said that despite the planned increase; Russia’s total production has failed to rise; As major producers are likely to encounter technical difficulties in increasing production in line with the current agreement.
GBC Energy cut its core crude demand forecast for December and January by 300,000 barrels per day.
In the United States, American energy companies maintained the number of oil and natural gas rigs, last week, and this comes with the spread of the Omicron mutant in a third of American states, starting from Sunday.
A number of analysts attributed the significant decline in oil prices during the past week due to concerns about the impact of the Omicron variable on global economic growth and demand for oil.
“Technical charts indicate that WTI has been in oversold territory, which may have attracted buying from short-term traders looking for a price recovery,” said CMC Markets analyst Kelvin Wong.
“The news flowing from Omicron is still superficial with conflicting messages from experts and health authorities, so I don’t see a strong rise in oil prices at this point,” he added.
However, the head of the International Monetary Fund said that the World Bank is likely to lower its estimate of global economic growth due to the new variable.
SOURCE : REUTERS