Oil Prices Rise After Supplying Nations Agree on Releases Despite Worldwide Omicron Surge

Oil prices are rising again after allied oil-producing countries agreed to release more barrels.

U.S. crude oil rose in price by 1.7 percent on the New York Mercantile Exchange, resulting in $77.32 per barrel. Meanwhile, Brent crude oil's price, an international benchmark, rose by 1.5 percent to $80.28 a barrel.

OPEC and its allies make up OPEC+, a 23-member coalition that is working to restore oil production to pre-pandemic levels. The coalition, led by OPEC member Saudi Arabia and nonmember Russia, agreed on Tuesday to release 400,000 barrels of oil per day in February. The move is in line with a road map aimed at gradually restoring production cuts made during the worst part of the pandemic.

As with many industries, the coronavirus pandemic has created difficulties for the oil industry. With the Omicron variant spreading throughout the globe, it seemed the pandemic would continue to devalue oil, with low market prices and plunging stocks. However, it appears the market is beginning to stabilize as more supply continues to be released around the world. Now, Omicron is not expected to drastically affect the oil industry as it tries to recover.

Oil Rigs
Oil prices are rising as OPEC and its allies agreed to release 400,000 barrels of oil a day in February. Above, oil rigs in Culver City, California. Photo by David McNew/Getty Images

OPEC's oil production increases are gradually restoring deep reductions made in 2020, when demand for motor and aviation fuel plummeted because of pandemic lockdowns and travel restrictions. At times, OPEC+ hasn't moved fast enough in raising production for President Joe Biden, who has urged producing countries to open the taps wider to combat surging gas prices and aid the economic recovery.

The U.S. and other oil-consuming countries on Nov. 23 announced a coordinated release of oil from strategic reserves in an effort to contain rising energy prices that have helped fuel inflation and raised politically sensitive gasoline prices for U.S. drivers. Yet Biden's move is seen as having only a muted effect on prices.

Oil prices climbed more than 50 percent last year as many pandemic restrictions eased and as the world learned how to better cope with precautions against the virus. The Omicron surge comes as the global economy is still in the process of healing. Growth has surpassed pre-pandemic levels in the U.S. but is only expected to do so in Europe in the first months of the year.

A recent decline in U.S. gasoline prices—which are significantly influenced by the price of crude—has steadied at a national average of $3.28 per gallon, down from about $3.40 in mid-November. Drivers face different prices depending on where they live. The average price in California was $4.66 per gallon, while drivers in Wisconsin paid $2.99.

The Associated Press contributed to this report.