US oil sank 6% to around $73.50 a barrel. Brent crude, the global oil benchmark, fell 5% to around $78.
South Africa’s health minister said Thursday that a new coronavirus variant appears to be spreading rapidly in parts of the country. It has also been detected in Botswana, Hong Kong and Israel.
Investors were “spooked” by the discovery of the new Covid-19 variant, Jeffrey Halley, senior market analyst for Asia Pacific at Oanda, said in a research note on Friday.
Economists were already nervously watching a spike in Covid-19 infections in Europe. Some countries have introduced new restrictions to contain the spread, raising the prospect of reduced activity this winter at a time when inflation and supply chain woes are already clouding the outlook for growth.
“Beyond the current wave of infections in core Europe, a new variant of the … virus that is spreading rapidly in South Africa is causing serious concerns,” commented economists at Berenberg bank in a note on Friday.
“If Germany were to impose a national lockdown, we would likely have to downgrade our forecasts for German and eurozone GDP for Q4 slightly further,” they added.
Travel and airline stocks are among the biggest fallers Friday.
“With the delta wave in mind from earlier this year, investors are likely to shoot first and ask questions later until more is known about it,” Halley said.
— Rob North contributed to this article.