By John Ikani
The global benchmark, the Brent crude closed this week down 7.82%, currently trading $72.72 a barrel, after losing 11.55% on Friday.
The United States benchmark, the West Texas Intermediate (WTI) crude, for the week, dropped by 10.45%, currently trading $68.15 a barrel, after losing 13.1% on Friday.
Both contracts lost over $10 a barrel on Friday, representing their largest one-day drop since April 2020.
The ongoing panick selling of the black liquid is fueled by a new variant of the coronavirus known as Omicron which is reportedly vaccine-resistant.
Also, adding to the selling pressure is the coordinated release of oil reserves to the public, orchestrated by the United States.
Earlier in the week, the US Department of Energy announced the release of 50 million barrels of crude oil from the Strategic Petroleum Reserve (SPR).
How Omicron is pushing oil price down
An Organization of Petroleum Exporting Countries and its allies (OPEC+) source told Reuters that the cartel is monitoring developments around the variant, with some expressing concern that it may worsen the oil market outlook less than a week before a meeting to set policy.
Scientists have so far only detected the Omicron variant in relatively small numbers, mainly in South Africa but also in Botswana, Hong Kong and Israel, but they are concerned by its high number of mutations which could make it vaccine-resistant and more transmissible.
Bob Yawger, Director of Energy Futures at Mizuho stated, “The market is factoring in a worst-case scenario situation in which this variant causes massive demand destruction.” He also explained that news of the variant caused ructions in a market previously caught between producer and consumer nations.
Craig Erlam, Senior Market Analyst at OANDA stated, “The biggest fear is that it will be resistant to vaccines and be a massive setback for countries that have reaped the benefits from their rollouts.”
Drugmakers Pfizer and BioNTech stated that if necessary, they would be able to redesign their shot within 6 weeks and ship initial batches within 100 days.
