Oil Climbs Higher As U.K. Opts Not To Impose Omicron Restrictions

Meanwhile, Mexico is phasing itself out of international crude exports: File Image/Pixabay

Omicron once more proved to be less of a public concern as initially feared when on Tuesday oil prices extended their gains, supported by the U.K. deciding not to impose any new pandemic restrictions despite higher infection rates.

Brent, which neared $80 per barrel, was also supported by expectations that U.S. crude inventories would be shown to have dropped for the fifth week in a row, as well as supply outages.

Jim Ritterbusch, president of Ritterbusch and Associates, said, "The stock market appears poised to finish the year at or near record highs with easy spillover into the oil space pushing crude values higher.

"Support comes as well from high aggregated production disruptions in Ecuador, Libya, and Nigeria.”

In other oil related news on Tuesday, Octavio Romero, CEO of Petroleos Mexicanos, revealed at a press conference that the state-owned producer will reduce crude oil exports to 435,000 barrels per day (bpd) in 2022 before phasing out sales to clients abroad the following year.

The move is part of the Mexican government’s goal to expand the country’s domestic production of fuels instead of sending its oil abroad and importing costly refined products; Pemex has been one of the international oil market’s most prominent players, having exported almost 1.9 million bpd in 2004 to refineries in India and Japan.

Long range crude demand was a topic on Tuesday, following a revision from CNPC Economics & Technology Research Institute that pegged China's demand peaking in 2030 at 780 million tons (from a previously calculated 730 million tons).

CNPC believes fuel demand will peak first: gasoline, diesel, and kerosene will reach their limits in 2025 at some 390 million tons per year as the electrification of transport grows.

Also on Tuesday, Kuwait appointed its fourth cabinet in two years with Abdulwahab Al-Rushaid becoming finance minister and Mohammed Al-Fares retaining his position as oil minister.

Kuwait, which has about 8.5 percent of the world’s oil reserves, posted a record budget deficit in the last fiscal year due to a plunge in oil prices and pandemic restrictions.