The worsening COVID-19 infection in Britain calls for another lockdown. Public activities restrictions and limitations become the main concern for crashing oil demand in Europe. Reportedly, along with the news of Britain going into another lockdown, oil price recorded a slight drop.
Oil price drops, is Britain really the cause?
Earlier today, Reuters reported that oil price dropped around 3% on Monday. Accordingly, Brent crude also slipped 3% to $50.72 a barrel. Brent crude oil price slumped after reclaiming its highest since March by increasing 1.5% on Friday. Crude in E.S. West Texas Intermediate (WTI) also recorded a 2.9% decline to $47.68 a barrel. Similarly, WTI crude has just retrieved its highest record since February by climbing 1.5% on Friday.
The sudden decline in oil prices came in as a surprise since oil has been on a constant rise for seven straight weeks due to the positive development in COVID-19 vaccines. The drop in oil price followed the news that Britain is going into another lockdown due to the worsening COVID-19 infections.
Last Saturday, UK Prime Minister Boris Johnson announced that London and southeast England will operate under a new Tier 4 level of lockdown. Under the higher level lockdown, non-essential retail, as well as indoor leisure and entertainment, are required to close.
Britain’s lockdown: not only oil, businesses also threatened
The news of Britain’s new level lockdown is not only affecting global oil price, but also British businesses. Moreover, Britain has less than two weeks before bidding goodbye to the European Union. One of the main concerns for businesses is a failure to set on a goods trade deal. Businesses fear the aftermath caused by the issue might affect the financial markets, supply chains and even the European economies.
Mike Hawes of the Society of Motor Manufacturers and Traders explained to Reuters how the situation disturbs businesses, “this third shutdown comes at the worst possible time, as businesses face close of year challenges as well as uncertainty and upheaval from the Brexit transition period which ends in just 12 days’ time – with still no deal agreed.”
Similarly, Chiyoki Chen, a chief analyst at Sunward trading expressed the concern over the unending Brexit talks on the market sentiment. Quoted from Reuters, Chen said, “a tougher lockdown in Britain to fight a new strain of coronavirus and travel restrictions in other European countries led funds to unwind their long positions.”
Read also: OPEC Ponders Over Polar Opposite Oil Demands
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