WTI crude saw a huge drop yesterday, shedding $2.70 (-3.6%). Today, oil prices continue their selloff, with market participants anxious over climbing COVID cases and the potential of Iranian oil returning to the market. COVID cases are on the rise around the world, with global new cases hitting 623,000 last week. The Delta variant is now considered to be as transmissible as chickenpox, and the growing Lambda variant is showing increased transmissibility and vaccine resistance. Climbing cases and the possibility of a vaccine-resistant strain are threatening to send the world back to lockdowns, repeating some of 2020’s closures.
Amidst a bearish turn for oil prices, an oil tanker attack that ought to have lifted prices is going largely unheeded by the marketplace. A Liberian-flagged vessel, owned by a Japanese company and managed by a London-based enterprise, was attacked in the north Arabian Sea. The US State Department issued a statement Sunday that the attacker was more than likely Iran, though so far no retaliatory actions have been declared. Rising unrest of the Middle East normally proves bullish for oil prices, but markets are too frightful currently that oil demand will sink.
While oil prices are sinking, freight rates continue heating up. Three new states have issued hour-of-service waivers for drivers, allowing them to drive longer hours during the day. Minnesota’s waiver targets drivers carrying agricultural products, while Iowa and Wyoming are waiving hours for petroleum drivers. Amid the on-going petroleum driver shortage, the new waivers show the extent of the challenge.