The price of crude oil plummeted on Monday as concerns mount over the rapid spread of a new strain of Covid-19, causing a mass travel ban between the UK and more than 30 other countries around the world as leaders fight to keep the variant from spreading.
Known as VUI-202012/01, the new strain was first identified in the South-East of England in September, and has been attributed to the steep rise in cases seen in London and the surrounding counties in recent weeks.
Despite the travel restrictions, it has already been confirmed in a number of countries including Denmark, Gibraltar, the Netherlands and Australia, while authorities have reported suspected cases in Italy, France and South Africa.
With widespread travel bans coming into force this week, demand for oil has already suffered a sharp decline, with Brent Crude down 3.90% just days after rising 1.5% to reach its highest since March last Friday, while WTI Crude similarly slid 3.97% after climbing 1.5% on Friday to its highest point since February.
“The new strain of the COVID-19 virus is worrying for the market, as it is believed to be more infectious, and could lead to a host of new travel restrictions, sapping oil demand,” Pan Jingyi, market analyst at IG, told S&P Global Platts today.
Warren Patterson, head of commodities strategy at ING, added: “Over the past few weeks we have seen quite a bit of speculative money moving into the market, and the fear of more lockdowns and travel restrictions that this new virus strain has raised is causing some of that speculative money to close their positions”.