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Crude oil prices slip over 3pc on Omicron concerns

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TEXAS: Crude oil prices dipped over 3 percent on Monday as concerns over oil demand renew amid the virus-led risk-aversion.

As of 1210 hours GMT, the oil prices declined to the lowest level since December 06 amid demand concerns due to the Omicron variant. Brent, the international benchmark for two-thirds of the world’s oil, shed $1.94 (-2.64 percent) to reach $71.58 a barrel. Similarly, the US West Texas Intermediate (WTI) price reached $68.66 a barrel, down by $2.20 (-3.10 percent).

The price for Opec Basket was recorded at $74.66 a barrel with an increase of 2.11 percent, Arab Light was available at $72.42 with a 4.36 percent decrease, and the price of Russian Sokol slipped to $72.64 with a decrease of 4.31 percent.

The Omicron variant of coronavirus threatens to dent oil consumption globally. Governments around the world are tightening restrictions to stop the spread of the Omicron variant. Covid woes escalate in the West and challenge the holiday mood, as well as travel plans and hopes of energy demand linked to that.

Denmark and Ireland have imposed new restrictions over the weekend, while other European countries were considering additional curbs. The UK’s health minister Sajid Javid has said he is not ruling out further restrictions for the country before Christmas.

The Netherlands went into lockdown on Sunday and the possibility of more Covid-19 restrictions being imposed ahead of the Christmas and New Year holidays loomed over several European countries. The United States has also urged people travelling to visit loved ones to get booster shots and always wear masks in crowded public spaces.

It should be observed that the hopes of a Fed’s rate-hike in early 2022 also weigh on the risk appetite and oil prices. However, despite oil prices look set to remain under heavy pressure in the near term, analysts painted a brighter outlook over the next two years.

Goldman Sachs on December 17 brought back the prospect of $100 per barrel oil in 2023, saying that level was a possibility with oil demand reaching fresh record highs over 2022 and 2023.

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