Oil prices rose on Friday supported by greater market confidence from the decision at the OPEC meeting of major producers who vowed to intervene to help the market “if required”.
International benchmark Brent crude was trading at $70.88 per barrel at 0619 GMT for a 1.73% increase after closing the previous session at $69.67 a barrel.
American benchmark West Texas Intermediate (WTI) was at $67.73 per barrel at the same time for a 1.84% gain after trade ended at $66.50 a barrel in the previous session.
The world's major oil producers met on Thursday to discuss their production volume for January. Amid many concerns caused by the new COVID-19 variant, omicron, and the US-led international initiative to sell oil from Strategic Petroleum Reserves (SPR) to reduce high energy prices, OPEC producers chose to extend the existing deal to incrementally increase production cuts.
The 23-member group said they would raise production by 400,000 barrels per day (bpd) in January, however, they did not rule out holding urgent meetings to review their policy depending on pandemic developments.
With a promise of ongoing market monitoring and the group’s commitment to "make immediate adjustments if required,” until their next meeting on Jan. 4, investors were more reassured that the market is under control.
In July, major producing countries had agreed to raise output incrementally by 400,000 bpd from August to December and extend the production cut agreement from April 2022 to December 2022.
Under demand pressure since the emergence of omicron last week, oil prices posted their sharpest decline since April 2020.
Several countries have imposed travel bans on South Africa, where the variant first emerged, and other southern African countries, including Namibia, Lesotho, Botswana, Eswatini, Malawi, Zimbabwe, and Mozambique.
The WHO Director-General Tedros Ghebreyesus said Wednesday that at least 23 countries from five of six WHO regions have now reported cases of the new omicron variant, with numbers only expected to grow.
The decision to keep production increase volumes unchanged came despite pressures from US President Joe Biden who repeatedly asked OPEC to increase its output to help alleviate high energy prices. The group, however, refused to give in to his demands and agreed to stick to its 400,000 bpd production deal in December.
Biden then announced the decision of oil sales from its SPR to reduce rising oil prices and called on some major oil-consuming countries to follow suit.
Countries including China, India, Japan, South Korea, and the UK said they would join the US-led international force.
The US Department of Energy will release 50 million barrels of oil from the SPR, the largest petroleum stockpile in the world used for emergencies. The combined reserve sales from all countries so far are estimated at around 71.5 million barrels.