On Monday, Oil Prices fell due to renewed demand concerns, eclipsing supply disruptions in Libya and Kazakhstan. Even as researchers and industry trade journals warn that the oil market could tighten significantly this year, the Brent crude oil benchmark fell $0.95 (1.16%) to $80.80 per barrel. A new round of concerns about oil demand resiliency in the face of roughly 2 million new coronavirus cases as of Sunday, which even high vaccination rates don’t seem to be alleviating, has sparked today’s oil demand concerns.
Despite a vaccination rate of 90%, the number of cases in Quebec has risen to over 15,000, nearly five times the previous high. Over the weekend, Israel recorded 31,000 additional cases. The fact that China recorded its first local transmission of the Omicron variant over the weekend in the city of Tianjin is the actual concern with oil consumption—particularly short-term oil demand.
The Wall Street Journal stated on Monday that the high rate of transmissibility, combined with China’s fanatical response to the coronavirus with lockdowns, might drop China’s first-quarter growth down by 0.6 to 0.7 percentage points to just over 4% year over year. The possible blow to China’s economic growth this year, according to Goldman Sachs, is 0.9 percentage points, pushing its full-year growth prediction even lower than 4%.
Others believe Omicron has minimal impact on crude Oil Prices, and based on the first trading week of the year, they may be correct. Oil Prices rose more than 5% in the first trading week, as concerns over supply in Ecuador, Libya, and Kazakhstan exceeded the threat of a drop in demand from a highly transmissible coronavirus variety.