Oil prices and omicron variant: 2022 will be 'problematic year,' expert warns

Oil rebounded on Monday following Friday's worst trading session for crude since April 2020

Tom Kloza, global head of energy analysis at the Oil Price Information Service, warned on Monday that "2022 is going to be a problematic year" for prices and discussed how the new coronavirus variant could impact the industry. 

In an appearance on "Mornings with Maria" Monday Kloza noted that, despite the variant's potential impact, prices for gas are expected to "ease" over the next three months. 

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Kloza made the comments as U.S. stocks rebounded from the worst session of the year as investors assess omicron, the new COVID-19 variant and reports it may not be as bad as initially feared.

Oil also rebounded over 6% to the $72 per barrel level, a positive barometer for energy stocks. Oil prices and stocks plunged on Friday after the new coronavirus variant ignited worries from investors regarding the potential economic repercussions as another round of travel restrictions were implemented. Concerns over the omicron sparked crude’s worst trading session since April 2020 with oil plummeting 13%.

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XOM EXXON MOBIL CORP. 103.53 +0.12 +0.12%
CVX CHEVRON CORP. 155.99 +1.54 +1.00%

"I think it’s going to be pretty wild in the next two weeks," Kloza told host Maria Bartiromo, noting that "we’re not going to really have much of the science and the data for omicron for about two weeks." 

He added that, without omicron in the mix, there were predictions for a gas spike to occur "probably between March 15 and May 15 — like some of the old ones where gasoline would become unmoored to the crude oil mothership." 

"We’ll see if that happens now," Kloza continued. "Without omicron, it’s going to happen." 


He went on to explain that the U.S. does not have enough refining anymore. "We’re not importing as much and there is a lot of refineries that serve the United States that are going to close down."

"There will be new ones in 2023, but 2022 is going to be a problematic year," Kloza warned.

On Monday, the national average price for a gallon of gas was $3.39, the same as the day before and an increase of $1.27 from the year before, according to AAA

The association noted that as news of the Omicron COVID-19 variant surfaced, crude oil prices initially tumbled more than $10 to $68 a barrel on Friday; consumers caught a little break at the pump as the national average price for a gallon of gas dropped slightly to the $3.39 level, down a penny from the week before.

AAA spokesperson Andrew Gross noted in a news release that "it’s too soon to tell if fears of a global economic slowdown caused by the Omicron variant will push oil prices lower for the long term." 


Gross also pointed out that for now "the upward pricing pressure due to tightened supply and high demand seems to have abated, and that will likely result in pump prices stabilizing."

Top oil producers Saudi Arabia and Russia are considering pausing their planned efforts to ramp up oil production, according to The Wall Street Journal, after the U.S. and other energy-consuming countries said they would tap their national strategic petroleum reserves in an attempt to bring down gasoline prices.

The move comes after President Biden on Tuesday morning ordered a record-setting 50 million barrels of oil released from the nation's Strategic Petroleum Reserve in hopes of lowering gas prices, a decision made in coordination with other countries including India, the United Kingdom and China. 

"We think that probably the scenario for $90 and $100 has been removed because we even saw with the delta variant that oil prices dropped by quite a bit," Kloza told Bartiromo.  

He stressed that we're heading into a period where demand, particularly for gasoline, "drops off quite a bit." 

Kloza said the "key" is whether the new variant will significantly impact the airlines and, therefore, demand for jet fuel, noting that "people were just getting back to traveling like they were on air pre-COVID."


FOX Business’ Megen Henney, Jonathan Garber and The Associated Press contributed to this report.