Ashitha Shivaprasad

(Reuters) -Oil experts have lowered their prices forecasts for 2022 because of the Omicron coronavirus variation. This variant can cause headwinds in recovering fuel demand. Also, it risks a glut as oil producers pump more oil.

Survey of 35 economists, analysts, and others predicted that average oil prices would reach $73.57 per barrel in 2022. That’s about 2% below the $75.33 consensus from November. This is the first price drop in 2022 since August’s poll.

In 2022, the average barrel price is expected to be $71.38 per barrel, as opposed to $73.31 in consensus. [O/R]

“With oil demand growth slowing, supply growth persisting, and the energy crunch easing, we see the oil market balance expanding rather than shrinking in 2022 and thus expect prices to trend lower from today’s levels,” said Julius Baer analyst Norbert Rücker.

Benchmark Brent crude oil prices are currently at $80 per barrel and will see their largest annual jump since 2009. This is due to fuel demand rebounding.

The Omicron Omicron virus of coronavirus spreads faster than expected, which has prompted countries to tighten their restrictions. It could cause oil demand to decline if curbs are not lifted.

Global reopening will increase once Omicron surge passes, according to Edward Moya. OANDA’s senior market analyst said that prices for oil will remain volatile due to OPEC+ keeping traders on edge as they gradually raise their production.

After agreeing to increase output by 400,000 barrels per hour per month, the Organization of the Petroleum Exporting Countries (or OPEC+) will hold a meeting on January 4th.

Suvro Sarkar from DBS Bank said that “On the Supply Side, OPEC+ Strategy, U.S. – Iran Nuclear Talks and Speed of U.S. Shale Recovery will all be in play, but they will be secondary to each other.”

The demand for oil rose by approximately 3.2 to 6.0 million barrels daily (bpd), in 2022.