Oil prices lost earlier gains this afternoon after the European Medicines Agency said there is a link between the AstraZeneca vaccine and rare cases of blood clots.
Although a medical issue, any setback for Covid-19 vaccines can also cause a delay in the expected recovery for oil demand.
If campaigns get delayed, oil demand will also take longer to recover as restrictions and lockdowns are planned to be lifted only after a critical mass of the population is inoculated.
The AstraZeneca vaccine is currently one of the most used options in Europe and the market is now reacting as it braces for possible reactions by some European nations.
Britain’s JCVI committee said adults below 30 should be offered an alternative vaccine. Such an option is set to reshuffle the distribution planning for vaccines and some delays can reasonably be expected.
A chain reaction from nations that are using the AstraZeneca vaccine around the world would be a major disruption in the current global vaccination campaign planning and, even if officials try to downplay it, the needed changes could affect markets that have been waiting for the campaigns’ completion to recover.
The biggest impact of today’s AstraZeneca vaccine developments will mostly be felt in developing countries rather than developed ones, as the AstraZeneca vaccine has been touted as one of the easiest vaccines to transport and store.
US and Russia both seem poised to have big supply surpluses and will be able to send to Europe in due time- theoretically – but in the meantime more oil demand distress can be expected in Europe.
As the dust from today’s news settles, it is interesting to see if there will be a distrust sentiment among people who were due to be vaccinated, which can in turn affect the total inoculated population expectations.
When the first unproved links of the AstraZeneca vaccine and blood clots surfaced there was a reaction by both people and governments, with some campaigns halting temporarily.
Therefore it is hard to see how today’s announced findings will not affect the campaigns that are using this vaccine.
Oil demand is expected to recover further from the second part of 2021, but these expectations are based on the assumption that enough people will be vaccinated by then to justify the return to normality.
Some vaccination hiccups were always a possibility and depending on the length of potential campaign disruptions, the oil market recovery could lose speed, resulting in 2021 demand ending as much as 1 million bpd lower than where it would under a smooth vaccine rollout.
How much oil demand will be affected by the AstraZeneca blood clot link will be more easy to forecast in coming days, after monitoring the global reaction.
The last AstraZeneca vaccine scare triggered a Brent oil price correction from $70 per barrel to $61 per barrel, which was also compounded by intensifying EU lockdowns, as well as a general sentiment that it had been overbought as a financial instrument.
For the moment, oil prices are naturally falling on the latest vaccination hiccup and there is downside for a more negative reaction this week, depending on how governments react to the news.