Oil prices surge amid hopes coronavirus vaccine means return of global travel
Crude prices continued to climb higher on Wednesday following the news of potentially effective Covid-19 vaccines developed in Russia and the US. Brent crude soared above $45 a barrel, marking a 15 percent increase from last week.
Both Brent and US West Texas Intermediate (WTI) were up almost three percent on Wednesday, with WTI trading at $42.51 per barrel.
Oil prices skyrocketed on Monday after US pharmaceutical giant Pfizer and German firm BioNTech announced their vaccine would be more than 90 percent effective in preventing coronavirus infections. The news resulted in crude oil having its best day in months, soaring more than ten percent.
On Wednesday, Russia’s sovereign wealth fund (RDIF) also said the early results from its late-stage phase three clinical trial of Russia’s coronavirus vaccine, called ‘Sputnik V’, showed that its efficacy amounted to 92 percent. Russia was the first country to register and approve a coronavirus vaccine in August.
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“This is a sigh of relief to some extent by the market,” Karim Fawaz, who leads the energy advisory service at consultant IHS Markit, was quoted as saying by Bloomberg. “The short-term is still quite challenged, demand is looking quite weak. The second half of 2021 is when we expect to see that demand recovery start to take hold.”
Analysts say that once a Covid-19 vaccine is widely available, international travel could rebound. Mohit Lal, chair and CEO of Pernod Ricard Global Travel Retail, said recently he believes that a widely available vaccine would restore consumer confidence in travel.
“Tomorrow, if there is a simple drug that is available everywhere that prevents Covid from being anything more than a regular flu, you will see travel get back in six months’ time,” Lal told trade publication the Spirits Business.
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