Oil prices witnessed their biggest day-on-day loss in 18 months this Friday, with WTI falling a whopping $10.2 per barrel to the low $70s as Omicron fears sent ripples across markets. The WTI Jan 2022 contract saw the highest number of traded volumes since April 2020, well above 800,000, as slumping oil prices broke through key technical levels and triggered algorithmic trading, OilPrice reports. 

The rapid rise of Omicron cases across the globe and the lack of information regarding its health impacts have triggered a series of travel restrictions, with some countries (notably Japan and Israel) already shutting their borders altogether. News of a potential OPEC+ policy rethink that would see the oil group pause its supply increments provided some supports for oil prices, though WTI fell on Tuesday morning towards the $66 mark.

Black Friday’s price collapse shook the oil market, destroying the bullish sentiment that had been building throughout the month. While prices partially recovered on Monday, they plunged again on Tuesday morning as uncertainty intensified. Concerns over the rapid spread of the Omicron variant have bolstered fears of demand destruction. Everyone is now focused on the upcoming OPEC+ meeting as the potential loss of 2-3 million b/d of global demand could convince the cartel to halt its 400,000 b/d monthly production additions.

Saudi Arabia shrugs off Omicron fears. Whilst other Middle Eastern countries were hesitant to assess OPEC+ prospects of incremental supply, Saudi Arabia’s energy minister Prince Abdulaziz bin Salman and Russia’s energy minister Alexander Novak were inclined to keep the oil group on its pre-charted course.

Iran wants to increase production capacity to 4 million b/d. With the Vienna talks on Iran’s nuclear program restarting this week after a five-month hiatus, Iran’s national oil company NIOC is readying to return to a production capacity of 4 million b/d by March 2022. 

Jet fuel demand poised to suffer. Demand for jet fuel, by far the largest laggard in terms of post-pandemic recovery, is now under severe pressure as Omicron fears continue triggering border closures. Originally, it was expected to have a robust Q4, but these new developments could ruin that. 

US oil major ExxonMobil is in talks with Nigerian energy company Seplat to sell its shallow-water oilfields in Nigeria, as it seeks to divest assets in Europe and Africa to finance its US shale expansion. Shell plans Libya return. UK-based energy major Shell is planning to return to Libya following its 2012 departure, eyeing oil and gas projects in the Sirte and Ghadames basins, as well as solar plants there. 

Indonesia offers 8 new oil and gas blocks in new round. The licensing round since the start of the pandemic, Indonesia is now offering 8 new oil and gas blocks located across the archipelago for licensing bids, stating the blocks had a total capacity of 500 MMbbls of oil and 22 TCf of gas. Lundin Energy considering a sale or merger. Sweden’s Lundin Energy, whose operations’ scope increased manifold thanks to its stake in the giant Johan Sverdrup field, is considering strategic alternatives that could include a merger or outright sale, OilPrice said.