Oil prices drop to two-month low as new COVID-19 variant emerges

The global oil prices fell to $77 per barrel, the lowest since September 2021 amid a new coronavirus variant and U.S. release of millions of barrels of oil from strategic reserves.

Brent crude oil futures, the global benchmark, dropped by 5.63 percent on Friday to $77.59 a barrel.

U. S West Texas Intermediate (WTI) crude oil futures fell by 6.52 percent to $73.28 at 12.06 pm.

Tamas Varga, an analyst for PVM, an independent broker of oil instruments, told Reuters that the unforeseen outbreak of the new variant coupled with the OPEC’s price gauge could affect fuel demand and reduce economic growth.

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

According to Reuters, investors were also monitoring the response of China to the U.S. 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 told Reuters that this release could increase supplies in coming months, based on findings of a panel of experts that advises ministers of OPEC countries.

Also, the OPEC source told Reuters that the Economic Commission Board expected 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 proceeded with the releases.