Oil down on OPEC+ drama

Oil was down Tuesday morning in Asia, as the Organization of the Petroleum Exporting Countries and allies, or OPEC+, continues deadlocked talks on February output.

Brent oil futures were down 0.23% to $50.97 by 11:11 PM ET (4:11 AM GMT) and WTI futures edged down 0.15% to $47.55, giving up earlier gains.

Both Brent and WTI contracts fell more than 1% during the previous session as OPEC+ was forced to extend Monday’s Joint Ministerial Monitoring Committee and 13th OPEC and non-OPEC Ministerial Meeting, with members failing to agree on the failed to agree on February’s oil output levels.

Fuel demand worries also continue to linger as the number of global Covid-19 cases continues to rise and more countries introduce restrictive measures. The UK was the latest country to tighten measures, with Prime Minister Boris Johnson ordering a new, tougher national lockdown on Monday.

Saudi Arabia argued against an increase in production as more countries contemplate and impose new lockdowns, while Russia argued for the increase, citing recovering fuel demand.

Talks will resume later in the day, but some investors were more concerned about the impact of the new B177 strain of Covid-19 on the global economic recovery.

“OPEC+ drama is of course steering the latest oil price downgrade, but the heavier hand is likely the still unknown impact of the new strain on economic activity and travel, both factors that warrant a belated mini-price correction after the winter holidays,” Rystad Energy oil markets analyst Louise Dickson told Reuters.

Meanwhile, prices were boosted after Iran’s Revolutionary Guards Corps on Monday seized a South Korean-flagged tanker in Gulf waters and detained its crew. Tensions between Tehran and Seoul had been mounting over $7 billion of Iranian funds frozen in South Korean banks thanks to US sanctions.

South Korean foreign minister Kyung Wha Kang said earlier that she is making diplomatic efforts to secure the release the tanker. The foreign ministry is reviewing whether vice foreign minister Jong Kun Choi would be visiting Tehran on Sundays as scheduled.

Investors also await the release of US crude oil supply data from the American Petroleum Institute, due later in the day.