New Covid variant causes oil prices and travel shares to plummet

Global oil prices are suffering as the “the most worrying” new covid variant was identified in South Africa, raising worries over new travel restrictions that could derail the market’s recovery. The price per barrel of Brent crude fell by more than $4, or 4.9% by mid-morning on Friday 26 November. 

This followed countries across Europe and Asia bringing in immediate travel restrictions to guard against the new Covid variant B.1.1.529. The US oil price per barrel plunged by more than $5 to just over $73. The new covid variant has multiple mutations to its spike protein that scientists fear could let it evade current vaccines. 

The UK has already placed the south Africa region back onto its travel red list with European Commission president, Ursula Von Der Leyen, saying the EU aimed to halt air travel shortly also.

B.1.1.529 threatens to reverse the oil market’s gains in recent months as travel and economic activity had begun to recover from a series of coronavirus lockdowns around the world.

The sudden drop in global oil prices also wiped value from the UK’s largest listed oil and gas companies. The oil giant Royal Dutch Shell had dropped by 5.5% by mid-morning on Friday, while BP tumbled 6.7%.

Russ Mould, the investment director at AJ Bell, said: “The drop in the oil price is the market’s way of saying it is worried about a reduction in economic activity … Markets are clearly speculating that a rapid spread of a more brutal Covid strain could once again derail the global economy.”

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