By Adedapo Adesanya
Oil prices dropped on Monday, April 26 as the Organization of the Petroleum Exporting Countries and its allies (OPEC+) raised concerns about surging cases of the coronavirus in India and other countries and its likely impact on demand of the commodity.
At the market yesterday, the Brent crude went down by 46 cents or 0.70 per cent to trade at $65.65 per barrel, while the West Texas Intermediate (WTI) reduced by 18 cents or 0.29 per cent to sell at $62.09 per barrel.
The Joint Technical Committee of OPEC+ is not happy with the growing cases of COVID-19 in India, Japan, and Brazil.
The JTC is responsible for assessing oil market fundaments. It is also tasked with monitoring which member countries are complying with the production cut quotas and which are not.
In the third-largest oil importer, India, for instance, cases are surging at an alarming rate with the country marking its fifth consecutive day of record cases.
On Monday, the Asian nation has hit a world record for the greatest number of new cases. Over 350,000 new cases were reported between Sunday and Monday, pushing the number of infected people to 17 million, with 5 million cases counted in April alone.
This will further impact recovery as India imports more than 4 million barrels per oil every day.
Japan, the world’s fourth-largest oil importer and fifth-largest oil consumer, is also struggling with an increase in the number of new coronavirus cases, as it has been slow to roll out vaccines.
The country announced the third state of emergency in Tokyo, Osaka and two other states on Sunday, affecting nearly a quarter of the population as the country attempts to combat a surge in contagion.
The JTC, which is meeting prior to the full ministerial meeting that will take place later in the week on Wednesday, is still weighing the impact of various lockdowns on the oil markets but it will not change its oil demand outlook.
The market premise was also affected by oversupply worries due to the end of force majeure on exports from a Libyan terminal and an expected supply increase from OPEC+ added to the pressure.
Libya’s National Oil Corporation (NOC) said it had lifted a force majeure on Hariga port after settling a dispute over its budget with the new government.
Business Post had reported that Libyan oil production fell last week from 1.3 million barrels per day to about 1 million barrels per day after the NOC declared the force majeure.
OPEC+ earlier this month agreed to ease production curbs by 350,000 barrels per day in May, another 350,000 barrels per day in June and a further 400,000 barrels per day in July.
Modupe Gbadeyanka