Oil price drops drastically by over 5% as the new B.1.1.529 variant of COVID-19 has discouraged investors and escalated concerns that supply surplus will grow.
The fear of the Covid-19 variant has created panic in the global market, with scientists revealing that the current variant would deter economic growth and demand for fuel.
Brent crude fell by 5.6%, to $77.54 a barrel by while U.S. West Texas Intermediate (WTI) crude was down 6.6%, at $73.19 a barrel.
The strategic release of oil reserves by the U.S and other countries is likely to swell supply and reduce oil prices. This is according to to findings of a panel of experts that advises ministers of the Organization of the Petroleum Exporting Countries.
U.S. release of millions of barrels of oil from strategic reserves in coordination with other large consuming nations, part of its bid to cool prices.
The Economic Commission Board expects a surplus of 400,000 barrels per day (bpd) in December, rising to 2.3 million bpd in January and 3.7 million bpd in February if consumer nations went ahead with the releases, the OPEC source said.
The forecasts cloud the outlook for a Dec. 2 meeting of OPEC and its allies, known as OPEC+, when the group will discuss whether to adjust its plan to increase output by 400,000 bpd in January and beyond.
“OPEC’s initial assessment of the co-ordinated (stockpile) release and the sudden appearance of a new variant of the coronavirus raises serious concerns about economic growth and the oil balance in coming months,” PVM analyst Tamas Varga said.
With indirect talks between Iran and the U.S due to resume on Monday, reviving a 2015 nuclear deal that could lead to the lifting of U.S. sanctions on Iranian oil exports will be the center of the meeting