By Adedapo Adesanya
Oil prices further moved downwards on Tuesday as a surge in the number of Delta variant coronavirus cases in China signalled a dent in demand for the global oil market.
Brent crude oil futures went down by 42 cents or 0.58 per cent to $72.47 per barrel, while the United States West Texas Intermediate (WTI) crude oil futures depreciated by 66 cents or 0.93 per cent to sell at $70.58 per barrel.
In China, the Delta variant has spread to 32 provinces within the last two weeks, indicating a rapid spread in the world’s largest oil importer.
Also, Australia is facing a possible “nightmare scenario” as a New South Wales outbreak sees an increase in the number of people in intensive care.
As the number of reports surrounding the Delta variant increase, so does the fears surrounding oil demand, particularly if a new round of lockdowns is announced in a high oil-consuming nation such as the United States.
The possibility of another lockdown translates to travel restrictions or restrictions on activities which would eat into the oil demand that has only just started to recover.
Expectations of a return of Iranian crude to the markets also had a negative impact as Iran and six powers have been in talks since April to revive a nuclear pact that could release its oil exports.
Although parties are yet to see eye to eye on the issue, both Iranian and Western officials have said significant gaps remain.
The talk was given a new turn when the new Iranian President, Mr Ebrahim Raisi, said on Tuesday his government would take steps to lift sanctions imposed by the US on its energy and banking sectors.
Parties involved in the negotiations have yet to announce when the talks will resume since it was postponed in June.
Meanwhile, there are expectations that US crude and product inventories likely declined last week. This will be confirmed by the US Energy Information Administration (EIA) on Wednesday after the American Petroleum Institute (API).
Dipo Olowookere