The world oil prices fall more than 5% on Monday, after the partial lockdown imposed by China in Shanghai, a major economic and manufacturing hub and the so-called financial capital of China.
The lockdown, which began Monday, is the largest in China since the coronavirus epidemic began more than two years ago.
At 4.12 Greek time, the WTI barrel fell to $ 107.6 while that of the Brent North Sea, delivered in May, fell to $ 114.3.
The Shanghai Composite stock index fell at the beginning of trading before recovering most of the losses later in the day. Despite the fall, oil price remains almost 80% higher than a year ago due to the war in Ukraine.
Traders were concerned about the effectiveness of China’s zero-tolerance policy against Covid, said Steven Ines, chief executive of SPI Asset Management. Mr. Ines also said in a note to investors that there were estimates for further supply chain disruptions as well as falling demand. “We may only be dealing with the tip of the iceberg,” he said.
However, Dan Wang, chief economist at Hang Seng Bank China, does not expect the lockdown will have a significant impact in supply chains. Most factories continue to operate normally and workers are either restricted on site or given priority for testing, the Shanghai-based economist told the BBC.
“This also raises growing concerns that China’s strict zero-Covid policy will lead to repeated lockdowns in key business centers,” Commerzbank analyst Carsten Fritz said in a note quoted by Reuters.
Demand for oil in China, the world’s largest importer of crude oil, is expected to be lower by 800,000 barrels per day (bpd) in April compared to “normal” levels as a result, Bjarne Schieldrop, chief commodity analyst at SEB Bank, told the agency.
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