Oil fell with global equities markets on fears the variant could dampen economic growth and fuel demand. Britain and the European states have limited travel from southern Africa, where the variant was detected.
Brent crude dropped $5.40, or 6.5%, to $76.82 a barrel by 1452 GMT.
After Thursday's Thanksgiving holiday in the United States, U.S. West Texas Intermediate (WTI) crude was down $5.82, or 7.4%, at $72.57 a barrel.
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Both contracts are heading for their fifth week of losses, and their steepest falls in absolute terms since April 2020, when WTI turned negative for the first time.
Investors were further watching China's reply to the U.S. release of millions of barrels of oil from strategic reserves in coordination with different large consuming nations, part of its bid to cool prices.
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Such a release is expected to swell supplies in the following months, an OPEC source announced, based on conclusions of a panel of specialists that advises ministers of the Organization of the Petroleum Exporting Countries.
The Economic Commission Board expects a surplus of 400,000 barrels per day (bpd) in December, growing to 2.3 million bpd in January and 3.7 million bpd in February if consumer nations went ahead with the releases, the OPEC source announced.
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The forecasts cloud the outlook for a Dec. 2 meeting of OPEC and its allies, known as OPEC, when the group will address whether to adjust its strategy to increase output by 400,000 bpd in January and beyond.
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"OPEC's initial assessment of the co-ordinated (stockpile) release and the sudden appearance of a new variant of the coronavirus raises serious concerns about economic growth and the oil balance in coming months," PVM analyst Tamas Varga stated.
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In fact, the new variant has such a long list of mutations that it was described by one scientist as "horrific," while another told me it was the worst variant they'd seen.
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Iranian production was likewise in focus, with indirect talks due to resume on Monday between Iran and the United States on reviving a 2015 nuclear deal that could lead to the lifting of U.S. sanctions on Iranian oil exports.
Although the failure of Iran and the International Atomic Energy Agency to reach even a modest agreement on monitoring of Tehran's nuclear facilities this week bodes poorly for next week's talks, Eurasia analyst Henry Rome stated.
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