As China, the world’s biggest oil importer resumed its coronavirus lockdowns, oil prices fell around 6 percent on Monday along with stock markets.
The price of Brent crude decreased by $6.45, or 5.7%, to $105.94 per barrel. Oil prices in the United States dropped $6.68, or 6.1 percent. The price of US West Texas Intermediate crude settled at $103.09. This year, both contracts have risen by around 35%.
Concerns over interest rate hikes and recession fears have roiled the world’s financial markets. COVID- In April, China’s export growth slowed as a result of 19 lockdowns.
As a result of the COVID lockdowns in China, the oil market has taken a hit, along with the stock market, according to Andrew Lipow, president of Lipow Oil Associates in Houston, Texas.
In the first four months of 2022, China’s crude imports decreased by 4.8% from the previous year, but imports rose by over 7% in April.
With independent refiner demand waning after the COVID lockdowns slashed fuel margins and rising imports of lower-priced Russian oil, China’s Iranian oil imports in April fell below peak levels predicted in late 2021 and early 2022.
The dollar hit a two-decade high, making oil more expensive for holders of currencies other than the U.S. currency.
Prices for Asian and European crude have been reduced by Saudi Arabia, the world’s leading oil exporter.
Deputy Prime Minister Alexander Novak was quoted as saying that Russia’s oil output rose in early May from April and that production has steadied after output dipped in April as Western countries implemented sanctions due to the Ukraine situation.
Brent and WTI prices rose for the second week in a row after the European Commission proposed a phased embargo on Russian oil. This week, EU members must vote unanimously to approve the idea.
An EU source tells Reuters that the European Commission is considering handing landlocked eastern European Union nations additional money to repair oil infrastructure in an effort to persuade them to agree.
Bjrnar Tonhaugen, Rystad Energy’s head of oil market research, says the EU oil embargo will cause a “seismic shift in the European and global crude markets” that could see EU crude imports from Russia cut by as much as 3.0 million bpd (barrels per day) by December 2022 in a full-fledged implementation of the policy.
By secretly developing an emergency package that may involve taking control of crucial companies, German officials have been quietly prepared for any sudden halt in Russian gas supply.
PM Kishida said that in principle, Russia would be banned as a crude importer, but added that this would take time.