(Bloomberg) -- The plunge in oil prices in reaction to the emerging Covid-19 variant from South Africa has been overblown, consultant Energy Aspects Ltd. said. 

Crude futures fell as much as 6% in London toward $77 a barrel on Friday as traders priced in the potential impact of a heavily-mutated Covid-19 variant. The material hit to demand is likely about 15,000 barrels a day, chief oil analyst Amrita Sen said, but the market is pricing in the worst-case scenario.

“This is a huge overreaction,” Sen said in a Bloomberg Television interview. “This is the market pricing in the worst possible scenarios.”

The slump is likely being exacerbated by low trading volumes over the U.S. Thanksgiving holiday period. Prices should rally back above $80 if vaccines are shown to work against the new variant.

Sen also said:

• Price move Friday justifies OPEC+ caution on output hikes and calls into question decision by consumers to release strategic reserves.
• Iran nuclear talks unlikely to have a quick resolution. Doesn’t see a return of nation’s barrels until September.

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