Oil prices plunged on Monday, as a disastrous second wave of the Coronavirus pandemic in India undermined a recovery in fuel demand there, overshadowing optimism about a strong recovery in fuel demand in the country alongside China in the second half of the year.
By 06:20 GMT, Brent crude futures for July delivery were down 0.7%, to $ 66.28 a barrel, while West Texas Intermediate crude for June delivery reached $ 63.11 a barrel, down 0.7% as well.
The total number of Covid-19 cases in India is approaching 20 million, while analysts expect India’s demand for transportation fuels to fall more sharply in May due to increased restrictions.
“It appears that Covid-19 has not reached its peak in India, (therefore) we expect to see further decline in fuel demand in May,” analysts from ING said in a note.
On Sunday, a major Indian industry urged the authorities to curtail economic activity, at a time when the health care system was groaning under the weight of an accelerating rate of injuries.
Globally, however, a Reuters poll showed that vaccinations are expected to raise global demand for oil, especially during the peak travel season in the third quarter of the year, prompting analysts to raise their expectations for Brent prices for the fifth month in a row.
The poll, which included 49 participants, expected the average price of Brent to reach $ 64.17 a barrel in 2021, up from last month’s average of $ 63.12 and an average of $ 62.30 for the global benchmark since the beginning of the year.
In terms of supplies, the Organization of Petroleum Exporting Countries pumped 25.17 million barrels per day last April, an increase of 100,000 barrels from last March, with increased production from Iran and other producers.
OPEC production has increased every month since June 2020, with the exception of last February.
Iran and the United States are in talks to revive the nuclear deal, which could lead to the lifting of US sanctions, which would allow Iran to increase oil exports.