(London) Oil prices fell sharply on Friday due to the risk posed to demand for black gold by the new variant of COVID-19 detected in South Africa.
At around 10:45 a.m. GMT (5:45 a.m. EST), the price of a barrel of North Sea Brent for January delivery fell 5.59% to $ 77.52.
In New York, a barrel of West Texas Intermediate (WTI) for the same month lost 6.58% to 73.23 dollars.
The two benchmark contracts on either side of the Atlantic fell to $ 77.28 and $ 72.60 respectively, the lowest since the end of September.
Prices are falling “because of fears that the new variant of COVID-19 will derail the recovery in global oil demand,” said Han Tan, analyst at Exinity, to AFP.
A new variant of COVID-19, currently called B.1.1529, has been detected in South Africa and has the potential for very rapid spread, scientists say, who do not know at this stage whether currently available vaccines are effective against him.
These first elements “had a devastating impact on oil prices overnight,” said Tamas Varga, of PVM.
Several European countries such as the United Kingdom, Italy, Germany or France have already taken measures, banning the arrival of travelers from southern Africa.
“The fear that others will introduce new containment and movement restriction measures further penalizes crude,” said Fawad Razaqzada of Thinkmarkets.
Measures restricting the movement of goods and people “reduce global demand for fuel,” said Ricardo Evangelista of Activtrades.
Price movements can also be amplified by limited activity in the markets, point out several analysts: after the Thanksgiving holiday on Thursday, Wall Street will only be open for half a day on Friday.
Market players and observers will all the more monitor “how OPEC” will take into account the demand risk linked to this new variant, as well as the impact of the release of strategic reserves by the main consumer countries. of oil, ”continues Han Tan.
Members of the Organization of the Petroleum Exporting Countries (OPEC) and their allies via the OPEC + agreement will meet next Thursday to decide on the evolution of their joint black gold offer early next year.
Several large consumers like the United States are pushing for them to turn on their black gold taps faster than they do in order to calm the rising prices which are weighing on the economic recovery.
In the meantime, Washington decided on Tuesday to resort to the opening of its strategic crude reserves in order to increase the supply available on the market.