International Oil Prices Plunge Amid Renewed Omicron Fear... WTI Down 5.4%

Moderna "Existing Vaccine Effectiveness May Decrease" Fear Resurfaces
OPEC+ Oil Production Adjustment Meeting Also a Variable... Concerns Over Sharp Fluctuations Intensify

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] International oil prices plunged again due to renewed fears over the COVID-19 Omicron variant, raising concerns about demand contraction. The main factor is analyzed to be the spread of fear in the market following forecasts that existing vaccines may not be effective against the Omicron variant.

On the 30th (local time), West Texas Intermediate (WTI) crude oil on the New York Mercantile Exchange (NYMEX) closed at $66.18, down 5.4% from the previous session. This is the lowest level in over three months since August 23. Compared to $84.65 recorded on October 26, it plummeted 21.81% in just over a month, marking the largest monthly drop since the COVID-19 pandemic. Brent crude oil from the North Sea on the London ICE exchange also fell 3.91% from the previous day to $70.57.

On this day, international oil prices sharply declined as selling pressure poured in due to worsened investor sentiment following remarks about the Omicron variant by Steve Bancel, CEO of Moderna, the previous day. In an interview with major foreign media, CEO Bancel stated, "Existing vaccines may not be as effective against the Omicron variant as they were against the Delta variant," which sparked controversy. Another Moderna co-founder, Noubar Afeyan, chairman of Moderna's board, also fueled fear by saying in an interview with Bloomberg News, "We must accept the serious threat posed by the Omicron variant."

With the expansion of fear over the Omicron variant raising concerns about demand reduction, and the upcoming OPEC+ production adjustment meeting scheduled for the 2nd, international oil prices are expected to remain volatile for some time due to overlapping caution.

Carsten Fritz, a commodity analyst at Commerzbank, explained in an interview with MarketWatch, "The international oil market is reflecting concerns about the resumption of lockdowns and travel restrictions by countries in response to the Omicron variant," adding, "While it is still difficult to accurately predict how significant the impact on oil demand will be, the fact that prices have dropped more than $10 since the 26th suggests a serious impact is expected."