Market Overview

Oil falls on surging virus cases and U.S.-China tensions

Oil prices slipped on Monday as the positive impact from COVID-19 vaccines and an OPEC+ deal on oil production cuts was undermined by surging coronavirus cases and heightened tensions between the United States and China. Brent crude fell 76 cents, or 1.5%, to $48.49 a barrel by 0911 GMT. U.S. crude was down 82 cents, or 1.8%, at $45.44.

Reuters exclusively reported that the United States was preparing to impose sanctions on at least a dozen Chinese officials over their alleged role in Beijing’s disqualification of elected opposition legislators in Hong Kong.

Both oil contracts gained last week after OPEC+, comprising of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, agreed to increase output slightly from January but continue the bulk of existing supply curbs.

A surge in coronavirus cases globally has forced a series of renewed lockdowns, including strict new measures in the U.S. state of California and in Germany and South Korea.

Iran, meanwhile, has instructed its oil ministry to prepare installations for the production and sale of crude oil at full capacity within three months, state media said on Sunday.

“Adding to the pressure on oil prices is the potential Iranian increase to production in three months. Iran is optimistic the U.S. will ease restrictions if they return back to the 2015 nuclear deal,” said Edward Moya, senior market analyst at OANDA.

Oil falls on surging virus cases and U.S.-China tensions, Reuters, Dec 7

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