By Barani Krishnan

Investing.com – Crude prices started 2022 with a portion of the losses they made on last year’s final day. This was because the global oil producer alliance OPEC+ tried to limit any untoward impact of Covid variants demand.

OPEC+ — a 23-nation alliance grouping the 13-member Saudi-led Organization of the Petroleum Exporting Countries with 10 other oil producers steered by Russia — is likely to green-light a 400,000 barrel-per-day output hike for next month when it meets on Tuesday.

In a market assessment released over the weekend ahead of its Tuesday meeting, OPEC+ said it expected the impact to oil demand from the Omicron variant to be “mild and short-lived”, as the world becomes better equipped to manage the Covid pandemic.

Prior to that, Saudi King Salman called on all oil producers last Thursday to stick with the alliance’s recommendations and output caps to ensure market stability.

And on Monday, OPEC’s new Secretary-General Elect Haitham Al Ghais said one of the group’s “major priorities is to promote the continuation of the OPEC+ pact through 2023” — referring to the production controls between the Saudis and Russians that have largely put a floor beneath crude prices since 2016. 

In order to keep the market positive ahead of the OPEC meeting, and the increase in production, there was constant chatter.

At 75.83 per barrel,, which is the U.S. benchmark crude oil price, had risen 0.8% to 62 cents by 1:58 ET (18:58 GMT). WTI fell 2% on Friday, 2021’s last trading day.

To reach $78.69, London-traded oil rose by 1.2% or 91cents. Brent fell 2% last Friday.

“It’s really surreal that oil prices would rise on expectations of an OPEC output hike, and not a cut,” said John Kilduff, founding partner of New York energy fund Again Capital.  

“But that’s really how much the pandemic has altered the fundamentals of this market. And OPEC wants to show it is confident about demand for oil despite the risk of emerging Covid variants because that would be the best way to get people to buy into the market.”

There has been no other time in human history that the oil market saw as much volatility as it did during the pandemic of two years ago. U.S. crude oil went from an average January 2020 price of $59 per barrel to below $40 in three months. It then soared to $85 for the seventh consecutive year, and finally settled at $75.

Monday’s market rebound was also helped by news that Libya, one of OPEC’s more important oil drillers, was expected to lose about 200,000 barrels daily in output over the next week because of a damaged pipeline.