Oil price makes swift recovery defying the doom and gloom


Oil price recovery Monday

The price of crude oil recovered on Monday defying the worst-case scenarios as the world still needs oil to function in a normal way. As of 15:00 GMT, the prices of WTI and Brent were $71.88 and $75.77 respectively.

Most analysts hoped that the prices would recover gradually; many, however, did not believe the initial recovery - by over 5%  - would be that swift.

Usually, the oil price recovers slowly in the event of a big crash like what we saw on Friday. This time, however, the prices recovered from the precipitous fall in just two days.

There are two possible factors behind the quick recovery: the Omicron variant of the coronavirus, according to the South African doctors who discovered it, is not as deadly as initially feared; the other was the evaporation of hope of a possible breakthrough in the current talks on reviving the JCPOA in Vienna, Austria.

Although the talks between Iran and the signatories to the JCPOA, 2015 Iran nuclear deal, started on Monday, the hope for a quick resolution was dashed by a joint statement issued by the British Foreign Secretary and her Israeli counterpart on the eve of the new round of negotiations, in which the former made the British position clear with regard to the Iranian position on the issue.

Referring to the article, a spokesman of the Iranian foreign ministry condemned the move by Israel to derail a potential, successful outcome of the talks.

Although Iran expects a success during the talks, it has been accusing the US of derailing the very goal, placing lots of obstacles along the path to the goal.

On the part of Iranians, they want a binding agreement that does not change from one administration to another – in a matter of 4 years when the occupation of the White House changes from the Republicans to the Democrats – a major bone of contention between the two sides.

The postponement of the OPEC+ meetings by one day may have also stemmed from the same development. The concerns of the main players of the OPEC+ must have been elevated when Iranian officials of the oil industry sounded optimism while highlighting how much Iran can contribute to the global supply in the event of the sanctions against it being lifted – something that the desperate US administration likes to hear about.

Iran simply wants to sell as much oil as possible in the shortest period of time to boost is coffers; Iran has to address a catalogue of economics and social issues as a matter of urgency, especially in the aftermath of the Coronavirus crisis.

The Iranian factor may already have been under discussion by the key players of the OPEC+. By mid-week, we may be able to get a sense of the way OPEC+ is going to deal with it in the near future.

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