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Oil Falls to $62 as COVID-19 Pushes Down Demand

The international oil benchmark, Brent crude, fell the most in nearly two weeks on Monday as growing delays in Europe’s reopening and looming Iranian supply dampened hopes for a swift decline in global inventories.

Brent, against which Nigeria’s oil is priced, dropped by $2.65 to $62.21 per barrel as of 9:06pm Nigerian time on Monday, while the United States West Texas Intermediate fell by $2.75 to $58.70 per barrel.

The United Kingdom may delay global travel beyond May 17 if COVID-19 infections continue to surge around the world, while Italy also extended some restrictions for travelers, adding further pressure to a recovery in oil consumption, according to Bloomberg.

Meanwhile, Iran, the United States and the remaining members in the 2015 nuclear deal are set to gather in Vienna on Tuesday (today) to discuss potentially resurrecting the agreement, presenting a possible path toward removing sanctions on the Middle Eastern country’s oil exports. Yet, Iran indicated talks won’t succeed without the US fully removing sanctions.

“OPEC+ deciding to phase in production increases over time, when combined with news that potentially there could be more Iranian output, could very well mean that the market perceives there will be an imbalance more than previously,” Bart Melek, head of commodity strategy at TD Securities, was quoted by Bloomberg as saying.

‘Demand from Europe being significantly slower may derail’ the near-term outlook for consumption, he added.

More Iranian supply coming back to the market and renewed lockdowns complicate the picture for the Organisation of the Petroleum Exporting Countries and its allies, which agreed last week to raise production by more than two million barrels per day over the next several months.

ran’s exports of crude, condensate and oil products could easily reach as much as two million bpd in the coming months amid a relatively muted US response to higher shipments, according to consultant FGE.

Still, Goldman Sachs Group Inc. sees ‘a lot more’ output being needed over the northern hemisphere’s summer to meet rising demand, and OPEC+ can adjust their decision as needed when it meets next at the end of April.

Saudi Arabia on Sunday raised prices for May oil shipments to Asia. Aramco, the state energy firm, will increase its grades to the region by 20 to 50 cents a barrel from April.

Most prices for northwest European customers won’t be changed, while most grades to the US will be cut by 10 cents. The move hinted at Saudi Arabia’s confidence in Asian demand recovering further.

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