Crude Drops $10/bbl, Bunkers Tumble on Omicron Coronavirus Variant

mRNA vaccine. File Image / Pixabay

Bunker prices tumbled today as crude Friday plummeted around $10/bbl on fears over the new "Omicron" coronavirus variant.

Originally detected in South Africa, detection of an Omicron case in Belgium today prompted the introduction of new travel restrictions by several nations including US, Japan, UK, and EU.

Omicron has also been detected in Botswana, Hong Kong and Israel.

It has been labelled a “variant of concern” by World Health Organization (WHO) after fears it could evade the current crop of vaccines.

This raised the prospect of another raft of wide reaching global lockdown measures being brought into force that cold translate into reduced oil demand and a sharp supply surplus in Q1 of next year.

As a result, Brent Friday settled down $9.50, or 11.6%, to $72.72 a barrel, while in the U.S., West Texas Intermediate (WTI) Friday fell $10.24, or 13.1%, to $68.15 a barrel.

It was the biggest one-day drop since April 2020.

"The market is factoring in a worst case scenario situation in which this variant causes massive demand destruction," Bob Yawger, director of energy futures at Mizuho, was quoted by Reuters as saying.

Many marine fuel markets saw double digit drops for key grade VLSFO today, with Singapore slipping $11/mt, according to Ship & Bunker data.

While little is currently known about Omicron, if current vaccines do prove ineffective against the variant, Pfizer and BioNTech have said they should be able to adapt their mRNA vaccine within six weeks and being shipping it within 100 days, CNBC reports.