Oil prices collapse as Omicron sweeps across globe

Oil prices slid today as traders dumped holdings on fears the rapid spread of Omicron will severely curb demand for the commodity.

The world’s leading international benchmarks, WTI and Brent Crude, collapsed 5.14 per cent and 4.45 per cent respectively.

Concern that major oil consuming countries are headed for tougher restrictions on economic activity to curb the spread of Omicron is dampening the outlook for oil demand.

The UK government has refused to rule out imposing a pre-Christmas circuit breaker lockdown, with deputy prime minister Dominic Rabb this morning warning there are no “guarantees” that more restrictions are not imminent.

The Netherlands launched a full-blown lockdown overnight.

A return to the toughest Covid-19 prevention measures to reduce the spread of Omicron would hit oil demand due to economic activity being severely disrupted.

Analysts are concerned a sharp pullback in demand could lead to a glut in the oil market, weighing on prices in the coming months.

Oil is “becoming oversupplied as lockdowns and travel restrictions hurt demand,” said Ole Hansen head of commodity strategy at Saxo Bank.