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The Omicron Variant has Retracted the Prices of Crude Oil

The World Health Organization stated the new Omicron strain poses a significant global danger, and a major pharmaceuticals company warned currently available COVID-19 vaccinations are less effective against it. Crude oil futures fell sharply in London trading on Nov. 30. The ICE January Brent crude futures contract was down $2.36/b from its last settlement at $71.08/b at 1200 GMT Nov. 30, while the NYMEX January WTI futures contract was down $1.91/b at $68.04/b.

Oil prices fell once further, almost totally erasing the previous day’s minor gains, bringing current levels close to the Nov. 26 close. The key catalyst for the bearish opinion was statements made by Moderna’s CEO, who stated that current vaccines’ efficacy against the Omicron strain is limited, and that developing and producing a more potent version might take months.

The Omicron Variant has Retracted the Prices of Crude OilAll financial and physical markets, particularly in Europe, reacted strongly to the remarks, with sharp losses across asset classes observed once again. During the late morning session, the FTSE 100 index was trading at GBP7,024, while the Stoxx 600 index was at Eur460.76. At the same time, all eyes were on the OPEC+ meeting on December 2, where it was possible that the group would decide not to increase crude supply further temporarily in accordance with previously agreed levels.

The cartel’s initial meeting was postponed from its original date to allow for the processing of additional information about recent market developments. In addition, if current market conditions change, the current agreement contains a clause that allows for a three-month pause in the planned supply increase.

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