International Oil Prices Fall 7.5% Amid OPEC+ Production Cut Easing and Delta Variant Fears, Breaking Below $70

WTI Falls Below $70 for the First Time in a Month... Slips to $66
Travel Demand and Economic Recovery Concerns Amid Delta Variant Fears

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] International oil prices plummeted more than 7% amid concerns over demand reduction due to the OPEC+ coalition of major oil-producing countries agreeing to ease production cuts and the spread of the COVID-19 Delta variant. Both West Texas Intermediate (WTI) and North Sea Brent crude fell below the $70 mark for the first time in over a month.

On the 19th (local time) at the New York Mercantile Exchange (NYMEX), WTI closed at $66.42 per barrel, down 7.51% from the previous session. This decline was the largest in over 10 months since September 8 last year. WTI prices fell below $70 per barrel for the first time in over a month since June 9. At the London ICE Futures Exchange, North Sea Brent crude also dropped 6.75% to $68.82 per barrel compared to the previous day. This was the lowest level since May 24 and marked the largest daily drop since March.

International oil prices started the day lower following news that major oil-producing countries in the OPEC+ ministerial meeting had agreed to ease production cuts. OPEC+ producers decided to ease cuts by an additional 400,000 barrels per day starting in August, signaling an expected increase in supply. Additionally, news that the long-standing dispute between Saudi Arabia and the United Arab Emirates (UAE), a source of market instability, had been resolved contributed to the decline in oil prices.

Subsequently, concerns over reduced oil demand due to the spread of the COVID-19 Delta variant intensified the decline. In particular, the U.S. Centers for Disease Control and Prevention (CDC) announced that the average number of new COVID-19 cases in the U.S. over the past week had reached the 30,000 range, freezing investor sentiment. Airline stocks such as United Airlines, Delta Air Lines, and American Airlines, which had been strong amid a surge in holiday travel in the U.S., all plunged sharply, delivering a direct blow to international oil prices amid demand concerns.

Troy Vincent, an analyst at DTN Investment, told MarketWatch, "The spread of the Delta variant is not only undermining OPEC's efforts to increase production without dragging down oil prices, but macro trades are also failing to support oil prices." He added, "Oil prices are under downward pressure due to the strong dollar, concerns over slowing growth in China and the global economy, and news of increased production by OPEC+ producers."

This content was produced with the assistance of AI translation services.