By Adedapo Adesanya
Oil eased on Monday on worries that rising coronavirus cases around the world could reduce crude demand as new doubts emerged about the effectiveness of vaccines against the Omicron variant.
Brent crude dropped 1.0 per cent or 76 cents to settle at $74.39 per barrel while the West Texas Intermediate (WTI) crude moderated by 0.5 per cent or 38 cents to $71.29 per barrel.
The World Health Organisation (WHO) hit the market with a fresh round of scaring news as it said that the Omicron variant, reported in more than 60 countries, poses a very high global risk, with some evidence that it evades vaccine protection.
The global health authority said there were early signs that vaccinated and previously infected people would not build enough antibodies to ward off infection from Omicron, resulting in high transmission rates and severe consequences.
It, however, maintained that it was unclear whether Omicron is inherently more contagious than the globally dominant Delta variant.
On their parts, governments around the world, including most recently the United Kingdom and Norway, were tightening restrictions to stop the spread of the omicron variant.
At least one person has died in the UK after contracting the omicron coronavirus variant, the first publicly confirmed death globally from the swiftly spreading strain.
These developments overshadowed a positive forecast from the Organisation of the Petroleum Exporting Countries (OPEC) which noted that the impact of the Omicron COVID variant on global oil demand will be mild and short-lived, as it left its 2021 and 2022 demand growth forecasts unchanged.
In its closely-watched Monthly Oil Market Report (MOMR), the cartel suggested that recent fears of Omicron slashing oil demand significantly may be unfounded.
“The impact of the new Omicron variant is expected to be mild and short-lived, as the world becomes better equipped to manage COVID-19 and its related challenges. This is in addition to a steady economic outlook in both the advanced and emerging economies,” OPEC said in its report.
The organisation revised down slightly its demand forecast for this quarter, mostly to account for COVID-19 containment measures in Europe and the potential impact of the new Omicron COVID-19 variant.
However, OPEC kept its full-year demand growth estimate unchanged from last month’s assessment of growth of 5.7 million barrels per day in 2021 compared to 2020.
For 2022, the outlook is also unchanged, with growth still expected at 4.2 million barrels per day compared to this year, as in last month’s outlook.
OPEC and its allies, OPEC+ group remain confident in oil demand, as well as the flexibility to immediately adjust production if needed, when it kept its production plans unchanged earlier this month, planning to add another 400,000 barrels per day to the market in January.
Modupe Gbadeyanka