Oil prices have dropped to seven-week lows amid soaring Covid-19 cases across Europe and fresh reports that Japan could release some of its reserves to help curb prices.
Brent crude plummeted to $78.89 on Friday, a three per cent dive.
This is the first time Brent prices have declined below $80 a barrel since the start of October.
WTI Crude has fallen even lower to $75.94.
This is the fourth week in a row prices have fallen after multiple rallies in October, which led to prices reaching three year highs of $86 a barrel in late October.
Prices have taken a hit with fears of curbed demand as economies across Europe are face new more restrictions this winter to battle spiralling Covid-19 cases.
It has served as a stark reminder to investors that pandemic waves can still emerge and disrupt economic behaviour.
Austria has announced a full national lockdown, starting today for potentially three weeks, as case numbers reach record levels nationwide.
The country additionally plans to make vaccines compulsory.
Netherlands, Italy, Czech Republic, Slovakia and Croatia have also announced new measures to either restrict social contact or impose vaccine passes on citizens.
Germany’s health minister Jens Spahn has refused to rule out another lockdown, describing his country’s situation as a “national emergency”.
Earlier this month, the World Health Organisation described Europe as the “epicentre of the pandemic”.
Regional director Hans Kluge has warned there could be half a million more deaths across the continent unless more action was taken to stop the spread of the virus.
Fresh unrest across the continent has followed the imposition of new government measures with tens of thousands of people taking to the streets in Vienna this weekend, while a riot broke out on Friday night in Rotterdam.
Smaller demonstrations have taken place in Zagreb and Rome against mandatory vaccines for workers, and so-called green passes that restrict the movements of non-vaccinated people.
Biden makes progress in plans to prevent more price hikes
Meanwhile, Japan’s Prime Minister Fumio Kishida signalled his readiness last weekend to counter oil price hikes, following a request from the US to release some of its reserves .
Japan government is not legally permitted to release reserves specifically to lower prices, but it can offload reserves when supplies are constrained.
This follows talks between the White House and China last week to both release reserves to counteract rising prices.
The news will be a source of great encouragement for US President Joe Biden, who is facing a difficult mid-term election next year amid rising living costs.
Brent has surged almost 60 per cent this year, driven by a wider energy crunch as economies recover from the COVID-19 pandemic.
He previously called on OPEC+ to increase supplies but his pleas fell on deaf ears, with the organisation fearing fragility in supply chains.
It has maintained its commitment to 400,000 barrels per day each month through 2022.