Vaccine Concerns Push Crude Oil Down

Crude oil prices stumbled on Tuesday US crude futures fell by more than 6%, after Moderna’s chief ignited doubts about the efficiency of COVID-19 vaccines against the Omicron variant, startling financial markets and heightening worries about oil demand.

Brent crude futures fell $2.95, or 4%, to $70.49 a barrel by 12:12 p.m. EST (1712 GMT), after hitting an intraday low of $70.22, their lowest since August.

US West Texas Intermediate (WTI) crude futures fell $4.30, or 6.2%, to $65.65 a barrel. The benchmark dropped to a session low of $65.23, also its lowest since August.

Another wave of lockdowns could result in up to 3 million bpd (barrels per day) of oil demand lost in the first quarter of 2022 as governments prioritize health safety over reopening plans, of which there is already telltale evidence, from Australia delaying its reopening to Japan banning foreign visitors.

Brent’s six-month backwardation narrowed to around $1.50 per barrel, the lowest since March. WTI’s six-month backwardation fell to about $1.90 per barrel, its lowest since September. ,

Oil plunged around 12% last Friday along with other markets on fears the heavily mutated Omicron variant would spark fresh lockdowns and impact global oil demand. It is still unclear how severe the new variant is.