Oil prices drop as Covid-caused threats to economy offset worse supply

17:03, 12 July 2021
Oil prices drop as Covid-caused threats to economy offset worse supply Photo: Vasily Fedosenko/Reuters

Worries over OPEC disagreements are neutralized due to economic stagnation anxiety.

Brent crude for September fell 86 cents, or 1.1%, to $74.69 a barrel. West Texas Intermediate crude for August was at $73.71 a barrel, down 85 cents, or 1.1%. Both benchmarks fell about 1% last week.

The changes come shortly after the G20 meeting where the strongest economies of the world expressed concerns about the evolution and spread of Covid. Slow paces of vaccination and unequal access to shots are other reasons for economic worries.

However, the mentioned problems neutralized the discords that appeared during the last OPEC+ meeting. Last week Saudi Arabia and the United Arab Emirates could not come to an agreement on output volumes and plans to pump more oil from August.

Reuters reports that Russia has been trying to smooth the conflict and make the parties meet in the short run, but new reunions are not expected yet.

For the moment economists predict that there will be less oil in the short term. Furthermore, there is a risk of the producers’ acting on their own.

Current prices are almost as high as they were in 2018.

The US administration says that it is monitoring the situation. US President Joe Biden said this Monday that OPEC+ had not been a topic of discussion during the presidents’ call on Friday.