Oil has fallen by 3% due to concerns about the effectiveness of the vaccine

Florence Tan and Dmitry Zhdannikov

SINGAPORE / LONDON (Reuters) – Oil prices fell more than 3% on Tuesday Modern (NASDAQ 🙂 The CEO questioned the effectiveness of COVID-19 vaccines against the Omicron coronavirus variant, frightening financial markets and raising concerns about oil demand.

The head of modern medicine told the Financial Times that COVID-19 vaccines are unlikely to be as effective against the Omicron variant of coronavirus as it is against the Delta variant.

futures fell $ 2.32 or 3.2% to $ 71.12 a barrel at 0912 GMT, after falling to $ 70.52 a day, the lowest since Sept. 1.

US West Texas Intermediate (WTI) crude futures fell $ 2.15 or 3.1% to $ 67.80 a barrel from a session low of $ 67.06, the weakest since Aug. 26.

Fed Chairman Jerome Powell will also tell U.S. lawmakers on the day that the variant could jeopardize economic recovery, as prepared notes show.

“The economic impact is driven by fear, and policy responses … Fear is causing travel. There is an absolute ban. But so is the fear of stagnation, which leads to a change in travel plans,” Paul Donovan of UBS said in a statement. .

Oil fell about 12% on Friday along with other markets, fearing a highly mutated Omicron could spark new blockades and reduce global oil demand. It is not yet clear how serious the new variant is.

With weakening demand forecasts, expectations are growing that the Organization of the Petroleum Exporting Countries, Russia and their allies, jointly called OPEC +, will halt plans to add 400,000 barrels a day to supply in January.

“We believe the group will stop production hikes in the wake of the Omicron variant and the release of major oil consumer oil depots,” Vivek Dhar Commonwealth Bank’s raw material analyst said in a statement.

Pressure was already growing within OPEC + to hold a meeting on December 2 to reconsider its supply plan, following the release of emergency reserves last week by the United States and other major oil-consuming nations to address rising prices.

“After announcing the release of strategic reserves around the world and dozens of countries reducing travel … OPEC and its allies can easily justify stopping production or even a small reduction,” OANDA analyst Edward Moya said in a statement.

However, Citi analysts expect OPEC + to continue to add more barrels in January.