Friday, January 28, 2022

Lowest World Oil Prices in the Last 2 Months

Image Credit: iStockPhoto

Reported on Friday (26/11). World oil prices hit their lowest level in two months following the issue of a new variant of the Covid-19 that worried investors and exacerbated concerns that the supply surplus could swell in the first quarter. 

The price of benchmark Brent crude at 1035 GMT was reported to have fallen by US$ 4.68 or 5.6% to US$ 77.45 per barrel. Meanwhile, the United States (US) West Texas Intermediate (WTI) crude oil price fell by US$ 5.20 or 6.6% to US$ 73.19 per barrel, following the Thanksgiving holiday, on Thursday (25/11) in the United States of America.

The decline in world oil prices coincided with the global stock market amid fears of a new variant of Covid-19. According to British authorities from scientists’ records, the discovery of the new variant is the most significant to date because it can limit travel, reduce economic growth, and fuel demand. 

On the other hand, investors are also watching China’s response to the release of millions of barrels of United States (US) oil from its strategic reserves through coordination with other large consuming countries. 

“Such a release is likely to swell supply in the coming months,” said a source at the Organization of the Petroleum Exporting Countries (OPEC), based on the findings of a panel of experts advising OPEC ministers.

“OPEC’s initial assessment of the coordinated release (hoarding) and the sudden appearance of a new coronavirus variant raises serious concerns about economic growth as well as the oil balance in the coming months,” said PVM analyst Tamas Varga.

Iranian oil production is also in focus, following indirect talks to resume on Monday (29/11) between Iran and the United States to revive the 2015 nuclear deal, which could lead to the lifting of US sanctions on Iran’s oil exports.

“But the failure of Iran and the International Atomic Energy Agency to reach a simple agreement on monitoring nuclear facilities in Tehran this week bodes badly for next week’s talks,” said Eurasia analyst Henry Rome.

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