Oil drops due to coronavirus

On Monday, the oil market showed a decline in Brent to $72.23 per barrel, which, however, was quickly replaced by an increase to $73.22. Oil prices have been weighed down by concerns over fuel demand due to the spread of COVID-19 variants and floods in China. At the same time, the asset is supported by expectations of a shortage of supplies in the second half of the year.

WTI crude oil fell today to $70.73 per barrel, later recovering to $71.80 per barrel.

Over the weekend, the number of coronavirus cases continued to rise, and some countries have expanded isolation measures, which could slow oil demand. In China, the largest importer of hydrocarbons, in addition to the increase in the number of cases, there are also severe floods and typhoons in the central and eastern parts.

At the same time, expectations of a deficit in world oil markets remain, despite the OPEC + decision to increase production by the end of the year. Moreover, the prospect of a quick return to the market for Iranian supplies is diminishing as negotiations to reopen the 2015 nuclear deal were pushed back to August. The United States fears that Iran may not return to nuclear negotiations at all or take a tougher stance at them, so the States does not rule out the possibility of taking tough measures against the sale of Iranian oil to China.