Oil prices plummet as new coronavirus strain causes travel restrictions

Oil prices fell on Monday after a new strain of coronavirus discovered in the UK imposed new travel restrictions across Europe and worries that there could be more blockages globally.

Brent crude oil, an international benchmark, fell 2.6 percent to $ 50.91 a barrel. Futures related to West Texas Intermediate, the main US size, fell 2.8% to $ 47.74 a barrel.

While prices recovered slightly from the lowest of the day, the declines were the sharpest since November 6 and highlighted gains of five sessions for both Brent and WTI.

Oil demand will be a new success after a number of countries on Sunday banned travelers from the UK from limiting the spread of a new highly infectious strain of Covid-19 that has emerged in England. The British government said the new strain appeared to be spreading 70% faster than previous changes and imposed stricter restrictions on parts of the country, including London.

“The new variant of the virus and the new travel restrictions have increased anxiety again,” said Norbert Rücker, head of commodity research at Julius Baer..

“The road back to normal has its bumps and it seems to be the most recent.”

Shares of major European oil companies also fell on Monday. BP PLC was down 4.9%, Total SE was down 3.7%, and Royal Dutch Shell – which said Monday it would write off its assets by $ 4.5 billion – was down 5%.

Optimism about coronavirus vaccines and the return of Chinese economic activity have fueled a sharp rise in oil prices in recent weeks. Brent reached its highest level since early March last week.

These gains came despite warnings from the International Energy Agency that vaccinations will start to increase global oil demand. Rising levels of infection and a series of new restrictions mean that the recovery in crude oil consumption in some rich countries in Europe and North America is “coming back” this quarter, the IEA said last week.

The latest measures, with several major countries canceling flights from the UK, offer a new retrograde to European oil demand. Traders are giving up betting on the price increases they have made in recent weeks, according to Tamas Varga, an analyst at PVM Oil Associates.

“I don’t think the market has turned so bearish yet that people are willing to sell short, but the recession you are seeing now is likely to be strong,” Mr Varga said. However, the launch of vaccinations “will probably reduce the price,” he added.

France, Israel and Canada are some of the countries that have banned travel from the UK in an effort to preserve a new highly infectious strain of coronavirus that is spreading rapidly in England. Photo: Getty Images

Write to David Hodari to [email protected]

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