<article><p><i>Updates prices and information throughout.</i></p><p class="lead">Global crude prices tumbled today in one of the sharpest price drops in the history of futures trading, as the emergence of a new, potentially highly infectious Covid-19 variant sparked concerns about demand.</p><p>At settlement, the Ice front-month Brent contract was down by 11.6pc, or $9.50/bl, at $72.72/bl, and Nymex front month light sweet crude was down by 13.1pc, or $10.24/bl, at $68.15/bl, both the fifth biggest single-day price drops in the exchanges' respective 33 and 39 years of offering crude futures markets.</p><p>The sell-off was prompted by the discovery in southern Africa of a new Covid variant, dubbed Omicron by the World Health Organisation (WHO). The WHO said it is concerned about the variant's large number of mutations, and said "preliminary evidence suggests an increased risk of reinfection" when compared with other strains of the virus.</p><p>With travel restrictions being reinstated today to a number of countries in southern Africa by the UK, US and Singapore, among others, and the EU and Brazil calling for the same, there is clear concern about the risk that a new, more infectious variant could return many economies to lockdowns. </p><p>Today's falls in benchmark crude prices were the steepest for a single day since the first wave of Covid-19 in April last year, a period when US futures turned briefly negative.</p><p>The reintroduction of targeted travel bans could slow the <a href="https://direct.argusmedia.com/newsandanalysis/article/2272037">recent recovery in air travel</a> right before the holiday season, and this hit European airline shares hard today. IAG shares fell by 14.8pc, Lufthansa by 12.8pc, and Air-France-KLM 9.7pc, Easyjet 11.4pc and Ryanair 12.1pc.</p><p>Shares in Europe's large oil companies also took a hit. BP closed down by 7.9pc, Shell by 6.4pc, TotalEnergies 5.9pc, Spain's Repsol 7.3pc and Italy's Eni 6.2pc.</p><h3>Another dimension</h3><p>Today's price falls add a further dimension to next week's Opec+ meetings, where the producer group will decide whether to stick with its plan to gradually restore, in monthly 400,000 b/d increments, the crude production it removed from the market last year. Already on the group's agenda was the co-ordinated release this week of strategic reserves by some of the world's major consuming countries, which itself was a kick-back against recent high oil prices.</p><p>Earlier this week several Opec+ delegates told <i>Argus</i> they saw no need for the group to deviate from its plan, and today two delegates took a 'wait-and-see' approach. Another said the Opec+ output deliberations will be made by factoring in stocks and supplies, rather than price fluctuations. The deal does allow for the possibility of a three-month pause if market conditions warrant it.</p><p class="bylines">By Gavin Attridge, Reena Nathan, Ben Winkley, Ruxandra Iordache and Sean Cronin</p></article>
