Omicron has thrown a major curveball to the global outlook and the oil market isn't spared in that regard.

The immediate reaction saw oil tumble heavily, sinking back below $70. In part, there was some technical exhaustion helping to exacerbate the drop. But still, it points to supply and demand dynamics still being a key factor in the equation.

And that will continue to be the case in 2022 as well.

The key element in that regard will be what OPEC+ does for the most part. The bloc is likely to keep easing supply cuts and couple that with the potential for robust non-OPEC+ growth, it will make for a testing time in trying to balance things out. Before omicron, there is the sense that the market will be tight regardless of what OPEC+ does but it is different now.

If things in China continue to be heavily impacted and the global reopening takes longer to play out, that will be a massive headwind for oil prices. As such, pandemic-related developments are still an important story to follow.

For now, oil seems to have found a base in keeping above $70. However, any extended rally may require good news on the pandemic front in convincing buyers to step in with more conviction.

Otherwise, I can see OPEC+ feeling rather comfortable with prices at these levels for now.

That said, while the oversupply dynamic may be a key factor, it isn't the only major detail to focus on.

The shift - or at least the initial stages - of transitioning to renewable fuels in the next decade is also something to be wary about.

In that lieu, there is a massive amount of underinvestment among major oil and gas companies and that leaves the market potentially being undersupplied in the bigger picture as the world begins the above transition.

If traditional businesses are on the retreat, that will put a lot more importance on OPEC+. Especially more so on the major players, in particular Saudi Arabia.

And let's be honest. Wouldn't they just love to see oil surge above $100 per barrel?

This key factor will be a tough one to gauge considering it isn't quite "plain as sight" as compared to gauging output levels.

But it is part of the equation that will balance out any oversupply dynamic as pointed out earlier.

The other thing to consider in any rushed transition to renewables or low-carbon technologies is that any underinvestment in oil and gas prior to that won't just create energy crises like the ones we have been seeing in Asia and Europe over the past two to three months. It will also have dire economic consequences, especially for countries heavily reliant on importing energy i.e. coal, gas.