Sonali Paul

MELBOURNE (Reuters – Tuesday’s oil prices rose, extending a rebound after last week’s plunge. The rise in expectations of major producers that they would halt their plans to increase crude oil supply in January due to uncertainty surrounding the Omicron coronavirus variant has led to rising oil prices.

U.S. West Texas Intermediate crude oil futures rose 99 cents or 1.4% to $70.94 per barrel at 0105 GMT. This was in addition to Monday’s 2.6% increase.

After gaining 1% on Monday, futures rose by 82 cents to $74.26/barrel.

On Friday, oil plunged to 12% along with other markets due to fears that the Omicron mutation would lead new lockdowns and derail global growth.

Omicron poses a high risk for infection, according to the World Health Organization. This Monday was accompanied by travel bans in several countries. The new Omicron variant’s severity and ability to resist vaccines are still unknown.

As the outlook for demand is uncertain, there are rising expectations that the Organization of the Petroleum Exporting countries (Russia and its allies), due to meet Dec. 2, will stop plans to increase January’s supply by 400,000 barrels per daily (bpd).

Vivek Dahar, Commonwealth Bank commodity analyst said in a note that “we think the group will be leaning towards pausing output increases in light of Omicron variation and the oil stockpile released by major oil users.”

Already there was pressure within OPEC+ for a revision of its supply plans after the United States released emergency crude oil reserves last week to help with soaring prices.

Edward Moya from OANDA said in a note that “Following global strategic reserve release and the announcement by dozens of countries restricting travel between South Africa, neighbouring countries and other nations,” OPEC analyst Edward Moya stated.

Market concerns include the prospect that Iran will resume oil exports. These are the results of optimistic comments by diplomats after Monday’s restart of talks between Iran and world powers on renewing the nuclear pact.