Oil prices plunge as virus variant raises prospect of weakened demand

Oil prices plunge as virus variant raises prospect of weakened demand

Oil prices plunged on Friday as reports of a virulent new coronavirus variant sparked fears of more pandemic lockdowns and another blow to fuel demand, just as the US plans to release more supplies on to the market.

West Texas Intermediate, the American oil benchmark, dropped by more than 12.5 per cent, to $68.48 a barrel, as US traders returned following the Thanksgiving holiday. The international benchmark Brent fell 11 per cent to $73.18 a barrel.

Both of the oil markers were on course for their biggest one-day declines since WTI went negative in April 2020 at the height of the pandemic.

The falls in price came days after the White House, concerned about soaring petrol costs and widespread inflation, announced that it would release 50m barrels of crude from its Strategic Petroleum Reserve over the coming months — the biggest-ever drawdown of oil from the government stockpile — in conjunction with added contributions from five other countries.

The US announcement on Tuesday had little immediate effect on prices. But news of the B.1.1.529 Sars-Cov-2 variant, first identified in Botswana, has now overwhelmed sentiment.

“It obviously remains a wide-open question whether this new variant will truly pose a material threat to oil demand, with vaccination