New Covid Variant named Omicron: Oil Prices Drop As Investors Fear Travel Curbs

Covid Third wave
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As economics are starting to reopen, a new south African variant of COVID (B.1.1.529) gives rise to new fears among the scientific community. This new variant has already been found in places like Hongkong UK and The Eu. Though the Who is yet to determine the new variants risk factor, countries have started to impose travel curbs.

Just hours after detecting the new variant, the Uk imposed a travel curb on South Africa and other African countries. Also, the Eu is thinking about similar measures, and the Us is yet to make any decision regarding this. But the hasty actions taken by the countries and the fear of more countries doing the same has raised suspicion among oil industry investors. Another new variant would mean another dip in the world’s oil usage. 

Oil prices dropped significantly on Friday, hitting a two-month low. Brent crude fell $4.68, or 5.6%, to $77.54 a barrel by 1035 GMT.US West Texas Intermediate (WTI) crude was down $5.20, or 6.6%, at $73.19 a barrel On average price of oil reduced by five percent as investors fear a surplus in the oil reserve..

Investors were also watching China’s response to the USA releasing barrels of oil in a bid to cool off oil prices. Such a release would swell supplies in the coming months.

The Economic Commission Board expects a surplus of 400,000 barrels per day (BPD) in December, rising to 2.3 million BPD in January and 3.7 million BPD in February if consumer nations went ahead with the releases, the OPEC source said.

The forecasts cloud the outlook for an upcoming meeting on Dec 2 where OPEC and its allies known as OPEC+ would discuss the matter.

The OPEC upcoming meeting and the new South African variant have triggered oil prices to drop worldwide. And economists fear it may fall further if countries start imposing lockdowns and travel bans again. It will take a few weeks for the WHO to assess the new variant in the meantime properly it suggested countries not take hasty measures. 

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Bony Adnan is a young high schooler very passionate about journalism. Bony loves to learn new things and share his ideas with the world. He was the editor of his school's newspaper for two years. Currently, he is an intern at PanAsiaBiz. You can read some of Bony's thoughts and ideas at https://bonyadnan.weebly.com/. He is reachable at bony@panasiabiz.com.