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As cases of coronavirus soar across the world, oil prices have fallen more than two percent on both major petroleum benchmarks. Brent Crude has dropped 2.2 percent to $77.78 per barrel. WTI Crude has also declined, this time even further by 2.31 percent to $75.21.
Coronavirus cases have reached new pandemic highs across the globe.
The increase in infections has been driven by the highly transmissible Omicron variant.
Today City A.M. tweeted: “Oil prices dip two percent as Omicron variant renews concerns of a supply glut.”
Although the latest variant of coronavirus is considered milder, the large increase in cases has resulted in many of the major economies of the world re-introducing restrictions.
With the reintroduction of restrictions, petroleum suppliers fear a reduction in the demand for oil and a consequent supply glut.
The restrictions are set to reduce the demand for air travel with the consequence that the aviation industry will use less fuel.
According to a Reuters poll published on New Year’s Eve, oil analysts have consequently lowered their price forecasts for 2022.
A Reuters survey of 35 economists and analysts forecast Brent crude would average $73.57 a barrel in 2022.
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This amounts to two percent lower than the $75.33 consensus in November.
The reduction in price for 2022 will be the first drop since August.
In December 2021 both Brent Crude and WTI Crude posted their biggest annual gains since 2016.
Brent Crude ended the year up 50.5 percent while WTI posted a 55.5 percent increase.
This increase was spurred by the global economic recovery from the coronavirus pandemic slump.
The oil market has had a sustained period of ultra-low prices amid multiple coronavirus lockdowns across the world.
Prices rallied in autumn to a three-year-high of $86.70 per barrel on the Brent Crude benchmark.
Prices also shot up to a seven-year-high of $85.41 on WTI Crude.
However, both benchmarks then reported price drops of 13 percent to below $70 per barrel after the emergence of the Omicron variant.
The new strain has increased fears in the market of a return to lockdowns across key industrial economies.
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