Crude Oil prices Under Pressure, With COVID-19 Staging a Huge Comeback

As more countries restricted movement amid a surge in COVID-19 cases and a strengthening dollar, oil prices fell on Thursday morning, wiping out early gains, though tensions in the Middle East kept prices from falling further.

Oil bulls are out of steam over the impact of COVID-19 resurgence on domestic fuel demand in the near future after the COVID-19 resurgence and imposition of restrictions.

In Japan, emergency restrictions are set to expand to new prefectures on Thursday, while in China, the second-largest oil consumer, restrictions are put into place in some cities, and flights are cancelled, threatening fuel supply.

At early hours of trading in London, Brent crude oil futures were trading near $70 a barrel after earlier reaching a session high of $70.72.

A barrel of Brent crude dropped more than $2 on Wednesday.

After OPEC announced the deal, the market began to worry about the rising supply as global demand recovered as a result of COVID-19.

Expectations of an improved U.S. economy have fueled a rising dollar. As a result, the Federal Reserve may begin to tighten policy sooner than previously anticipated, also affecting oil prices. Oil becomes more expensive when the greenback strengthens.

OPEC’s production limits since April have boosted oil prices. On 5 July, WTI oil was trading at $76.38 a barrel, up 57% in the first half of this year. Between January and July of 2021, Brent crude gained 53% before soaring to a 30-month peak of $77.47.

If OPEC fails to comply with its output policy, oil prices could fall. Many analysts base their oil price predictions on the planned oil production of OPEC+ members.

If US sanctions are lifted against Iran, Iranian crude exports could return to the market. Oil supply will increase, which will affect prices.