Oil markets could plummet further on Monday, following price drops of over ten per cent last week on both major benchmarks amid deepening Covid-19 fears.
Prices dropped on the WTI Index by 13.1 per cent, trading at $68.15 at close of play on Friday – tumbling from $74 earlier in the day.
Meanwhile, Brent Crude suffered an 11.55 per cent decline with prices settling at $72.72 per barrel.
The falling prices have been driven by concerns over reduced demand following the discovery of the hyper-contagious Omicron variant.
OPEC+ is monitoring developments around the new coronavirus variant, sources told Reuters on Friday.
The organisation is set to establish future oil policy at a meeting next week, with growing concerns the new variant will significantly affect its market outlook .
It has previously committed only to 400,000 barrels per day per month through 2022, despite US President Joe Biden pushing for more supplies to enter the market.
The new Covid-19 variant could severely reduce air travel and consumption demand with potential for new social distancing policies, travel bans and potentially lockdowns across key markets.
Countries such as Austria, and Czech Repubic have already introduced new Covid-19 measures, prior even to the emergence of the new variant.
While oil prices remained resilient in the face of Biden’s pledges to flood the market with strategic reserves, in coalition with five other countries including China, Japan, South Africa, India and the UK, market rallies were no match for fears of further lockdowns.
After prices reached three year highs of nearly $86 per barrel in late October, it seems the future health of the market is dependent on whether the variant becomes a game-changer that severely reduces the potency of vaccines, or if it can be managed in line with previous alterations such as the Delta and Alpha variants.