Emmanuel Addeh in Abuja
Oil prices plunged about $10 a barrel yesterday, their largest one-day drop since April 2020, as a new variant of the Coronavirus spooked investors and added to concerns that a supply surplus could swell in the first quarter.
The World Health Organisation (WHO) has also designated the new variant as “of concern,” according to the South African Health Minister, while Britain, Guatemala and European countries are among those to restrict travel from Southern Africa, where the variant was detected.
Brent crude fell $8.62, or 10.5 per cent, to $73.60 a barrel in the afternoon, while US West Texas Intermediate (WTI) crude was down $9.36, or 11.9 per cent, at $69.03 a barrel.
Both contracts were heading for their fifth week of losses and their steepest falls in absolute terms since April 2020, when WTI turned negative for the first time.
News of the variant had caused serious apprehension in a market previously caught between producer and consumer nations.
The Organisation of Petroleum Exporting Countries (OPEC) and its allies OPEC+ are also monitoring developments around the variant, sources said yesterday, 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 B.1.1.529 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.
Drug makers Pfizer and BioNTech said if necessary they would be able to redesign their shot within six weeks and ship initial batches within 100 days, Reuters reported.
The foreign ministry said South Africa would speak to Britain to try to get it to reconsider its travel ban.
Oil prices rose early in the week as the OPEC+ suggested it could taper production in response to a strategic release from large consuming countries that are members of the International Energy Agency (IEA).
Such a release was likely to swell supplies in coming months, an OPEC source said, based on findings of a panel of experts that advises OPEC ministers.
The forecasts cloud the outlook for a December 2 meeting when the group will discuss whether to adjust its plan to increase output by 400,000 barrels per day in January and beyond, Reuters reported.
Earlier in the day, oil prices fell to $77 per barrel, the lowest since September 2021 amid fears of the new Coronavirus variant and US release of millions of barrels of oil from strategic reserves.
Investors were also monitoring the response of China to the US release of millions of barrels of oil from strategic reserves in partnership with other large consuming nations, a part of its to cool prices.
An OPEC source said that the release could increase supplies in coming months, based on findings of a panel of experts that advises ministers of OPEC countries.
If Nigeria is able to pump its backlog which it had failed to meet in the past months, the oversupply in the global oil market may be further worsened.
Last week, the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC) , Mele Kyari, signalled that by the end of the year, Nigeria will be able to restart its shut oil wells and be able to meet a target of 1.7 million barrels per day by the end of December.