Oil prices plunged by 3% early on Friday as Europe contends with rising COVID cases and is returning lockdowns and other restrictions, which the market fears would weigh on economies and oil demand.
As of 9:09 a.m. EST on Friday, WTI Crude prices had slumped by 3.05% at $76.60, the lowest level since early October. Brent Crude had dipped below $80 a barrel, and traded down 2.72% at $79.17, also the lowest in more than a month.
Prices sank after Austria announced on Friday it would impose a full lockdown starting on Monday.
Germany, its neighbor to the north and the largest economy in Europe, faces a "dramatic" fourth wave, German Chancellor Angela Merkel said earlier this week. On Thursday, Germany's 16 states agreed to introduce new restrictions depending on the hospitalization rate per 100,000 residents. If those rates exceed three people hospitalized with COVID per 100,000 inhabitants, free movement for leisure activities will be allowed only for those who are vaccinated or who have recovered from COVID. In Munich, the mayor scrapped the iconic Christmas market in the city, while a full lockdown in Germany is not entirely off the table. A full lockdown in Europe's largest economy would slow the economic recovery.
In Ireland, the government also announced restrictions this week, with pubs and nightclubs under curfew to close by midnight and people asked to work from home whenever possible.
COVID cases are also on the rise in the United States, where the Upper Midwest has registered the biggest jump in cases in what doctors describe as an "unprecedented" situation.
Apart from fears of an economic and oil demand slowdown amid rising COVID cases in developed countries, the oil market continues to watch apprehensively the possibility of releases from strategic petroleum reserves not only from the United States but also from major consumers in Asia, including China, India, Japan, and South Korea.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More