By Adedapo Adesanya
Oil prices slid more than 2 per cent on Monday as fears of a new strain of the coronavirus in the United Kingdom is threatening additional lockdown measures across Europe and reducing global travel.
This dragged down the price of the Brent crude futures by $1.35 or 2.58 per cent to $50.91 per barrel and weakened the US West Texas Intermediate (WTI) crude futures by $1.36 or 2.76 per cent to trade at $47.74 per barrel.
As earlier stated, reports of a new strain of the coronavirus have weighed on oil prices as millions of people in the UK are now required to stay at home after a full lockdown came into force in London and the southeast of England.
As part of preventive measures, travel to the UK was suspended in several parts of the world, including the Netherlands, Canada, Hong Kong, amongst others.
The Brent had edged closer to $52 last week for the first time since February and this was buoyed by optimism from COVID-19 vaccines but a new COVID-19 strain, which is said to be up to 70 per cent more transmissible than the original, has renewed fears about the virus, which has killed about 1.7 million people worldwide.
This made prices to take the hammer due to a renewed uncertainty around petroleum demand as more countries may face renewed movement restrictions, sharply curbing a recovery in global consumption.
The bearish outcome on Monday also came as the $900 billion economic stimulus package lingers at the US Congress.
The Organisation of the Petroleum Exporting Countries and its allies (OPEC+) will react faster to changes and take a more hands-on approach with the oil market thanks to its accelerated schedule of monthly meetings, Russia and Saudi Arabia said over the weekend. The group will consider whether to add 500,000 barrels a day of production to the market on January 4.
Russian Deputy Prime Minister, Mr Alexander Novak and co-Chair of OPEC+ said the new strain had an impact on oil prices, adding that recovery of global oil markets was happening more slowly than previously expected and could take two to three years.
Analysts also believe that travel restrictions over the next several weeks will complicate OPEC+ plans to gradually raise output.
The situation of the market overshadowed European regulatory approval for the use of the COVID-19 vaccine jointly developed by US company Pfizer and its German partner BioNTech on Monday.
The approval by Europe’s medicines regulator puts the region on course to start inoculations within a week.
Dipo Olowookere