Crude oil prices took a dive on Monday morning with WTI crashing 6% on the day as fresh Omicron fears spooked the market.
At 11:32 a.m. EDT, WTI crude was trading at $66.44, down $4.42 (-6.24%) on the day, with Brent crude trading at $69.69, down $3.83 (5.21%) per barrel as traders fear the demand destruction that could result from fresh lockdown measures taken to curb the spread of the new Omicron variant of the coronavirus.
The United Kingdom said it would not rule out coronavirus restrictions before Christmas after the government previously recommended working from home if possible. Boris Johnson and his cabinet are scheduled to meet on Monday to discuss these tougher measures.
While the U.S. is unlikely to institute new lockdowns, New York City is considering nixing its New Year’s party in Times Square. Omicron, already present in 89 separate countries, is prompting other countries to employ further restrictions. The Netherlands implemented new strict lockdowns on Sunday, with bars, restaurants, and nonessential shops ordered shut until mid-January. And only four guests will be allowed per household over the holidays. Prime Minister Mark Rutte called the strict measures “unavoidable”.
Germany will ban travelers from the U.K. starting on Monday, and Ireland has instituted an 8 p.m. curfew for bars, restaurants, and live events.
These lockdowns are spooking the crude oil markets, which was banking on oil demand perking up in the first half of next year. The IEA, however, said last week that while the surge in Covid cases was set to temporarily slow the recovery in global oil demand, the impact of the Omicron variant would likely be more muted than previous waves and wouldn’t’ upend the current demand recovery.
The market, however, isn’t buying those reassurances—at least not today.
NB: Julianne Geiger wrote this article for Oilprice.com
