As the Omicron coronavirus variant instigates worries in the international market, Asian oil refiners’ margins declined to its lowest figure in over four months, This could defect the recovering oil demand since the start of the Covid-19 pandemic.
Immediate actions have been taken by governments worldwide by restricting travel to and from South Africa to avoid an escalation of the new variant. Furthermore, research are being made by scientists to determine the nature of the omicron variant from its transmissivity to severity of death.
Refiners in Europe and Asia has experienced demand shortage due to the imposition of Covid restriction persists as coronavirus cases rises.
The new variant risks averting global economic recovery and by extension oil demand, which the International Energy Agency expects to grow by 5.5 million barrels per day to 96.3 million in 2021.
Howie Lee, an economist at Singapore’s OCBC bank. “At a time when many travel lanes are reopening, this is a setback,”
“We need at least two weeks to figure out what impact this new variant will have on oil demand.”
Oil prices fell over 10% on Friday their largest daily drop since April 2020 – but had only recovered some of those losses by 06:08 GMT on Monday, standing up more than 3% on the day. Analysts said the Friday sell-off had been excessive.
A major South Korean refiner said “We are seeing drastic drops in refining margins over the past few days due to concerns over the fast-spreading Omicron coronavirus variant,” said an official at, pointing to the growing number of countries imposing travel restrictions as a result of the new variant.
“From a refinery’s end, we are facing a double whammy – drops in oil prices and refining margins, which would likely worsen our profitability.”
Despite a weakening outlook for jet fuel, some analysts expect gasoline demand to stay firm for now as most governments have not yet imposed domestic curbs on movement because of the Omicron variant.
With the market outlook for jet fuel looking bleak, Researchers expect demand stability for gasoline, as domestic restrictions of movements has not been initiated by governments.
“Jet demand will get killed, but I think gasoline will hang in there,” said a Singapore-based analyst.
“Europe was already heading into lockdown, so that’s a wash, so it’s more about gasoline demand in the U.S. and Asia.”