Oil prices plunged Thursday after the International Energy Agency (IEA) warned that the spread of the Delta variant of the coronavirus would slow the recovery in global oil demand.
Brent crude futures fell from a session high of $71.90 to $70.99 a barrel as of reporting time. US West Texas Intermediate (WTI) crude futures fell 47 cents to $68.78 a barrel.
The IEA said in its monthly report that soaring oil demand slowed in July and would continue to decline for the rest of the year after the latest wave of COVID-19 infections prompted countries to reintroduce restrictions.
“Growth for the second half of 2021 has slowed more sharply as new COVID-19 restrictions imposed in several major oil-consuming countries, particularly in Asia, will reduce mobility and oil consumption,” the Paris-based international energy watchdog said. . said.
“We now estimate that demand fell in July as the rapid spread of the COVID-19 Delta variant undermined deliveries in China, Indonesia and other parts of Asia.”
The IEA estimated demand last month at 120,000 barrels per day (bpd) and forecast growth in the second half of the year would be half a million bpd lower than it estimated the previous month. Some changes were due to data revisions.
However, the Organization of the Petroleum Exporting Countries (OPEC) in its monthly report, also released Thursday, stuck to its forecast of a strong recovery in world oil demand in 2021 and 2022, despite concerns about the spread of the virus.
In July, OPEC agreed to increase production by 400,000 barrels per day each month from the previous month, starting in August, until the remainder of their record cuts of 10 million barrels per day, about 10% of world demand. , which were implemented in 2020, will be phased out.