Oil prices have recorded the largest daily decline in a year and a half, to lose more than 10% of their value, in light of investor concerns.
The drop in oil prices came after the discovery of a new strain of the Coronavirus, which worried investors and reinforced fears of an inflationary global oversupply in the first quarter of next year.
Britain said that scientists considered it the most important strain discovered so far of the Coronavirus, and called for restrictions on travel, which undermines economic growth and demand for fuel.
So far, Britain and other European countries have imposed restrictions on travel from South African countries, in which the new strain has been detected.
On Friday evening, Brent crude fell $8.77, or 10.7%, to $73.45 a barrel.
West Texas Intermediate crude fell $9.12, or 11.6%, to $69.27 a barrel after a holiday in the United States yesterday.
Authorities around the world moved with great concern yesterday, after news of the discovery of the new strain in South Africa.
The European Union and Britain were among the regions that tightened travel procedures, while researchers sought to find out whether mutations of the new strain were resistant to vaccines.
A source in the Organization of the Petroleum Exporting Countries (OPEC) said that the withdrawal of stocks will likely result in an increase in supplies in the coming months, according to the findings of a committee of experts advising the ministers of OPEC countries.
The source stated that the Council of the Economic Committee of OPEC expects a surplus of 400,000 barrels per day in December, increasing to 2.3 million barrels per day in January and 3.7 million in February if the consuming countries go ahead with withdrawals.
Expectations of an increase in oil supply dominate the prospects for a meeting of OPEC and its allies (OPEC+), on December 2 to decide on immediate production.
The OPEC+ will decide whether to continue increasing production in January.
Goldman Sachs estimated the total volume of withdrawals from stocks at about 70 million to 80 million barrels, which is less than the volume of global consumption in one day, and described this as “a drop in the ocean.”
OPEC+ has worked to increase the target production by 400,000 barrels per day every month since August, saying that these quantities are sufficient, as the surplus expected to be witnessed in the oil market during the next year.