Oil prices jumped over $1 a barrel on Monday following top exporter Saudi Arabia raising prices for its crude sold to Asia and the United States and as the indirect US-Iran talks regarding the revival of a nuclear deal appear to have to hit a deadlock.
Brent crude futures for February gained $1.69, or 2.4%, to $71.57 a barrel by 0033 GMT while US West Texas Intermediate crude for January was at $67.92 a barrel, up $1.66, or 2.5%.
On Sunday, Saudi Arabia increased January’s official selling prices for all crude grades sold to Asia and the United States by up to 80 cents compared to the previous month.
The price hikes were introduced despite the Organization of the Petroleum Exporting Countries and their allies including Russia made the decision last week to continue raising supplies by 400,000 barrels per day in January.
Prices were further buoyed by waning prospects of a rise in Iranian oil exports after indirect US-Iranian talks on reviving the 2015 Iran nuclear deal broke off last week. European officials voiced disappointment on Friday at the demands put forth by Iran’s new, hardline government. The talks are expected to resume middle of this week.
Both benchmarks recovered after plunging last week for their sixth week in a row for the first time since November 2018 owing to concerns that the new coronavirus variant Omicron could impact global economic growth and trigger demand.
As another development triggered by the ever-changing pandemic, the head of the International Monetary Fund (IMF) said the global lender is likely to lower its global economic growth estimates due to the emergence of the new variant.
Omicron has spread to around one-third of the US states as of Sunday.