Earlier this week, oil prices tumbled amid fears that the expanding Covid-19 outbreak in China will weigh on global demand, according to Bloomberg.
West Texas Intermediate futures are down about 3% to trade below $100 a barrel amid depletion of inventories and other commodities. A rise in cases in Beijing raised fears of an unprecedented blockade of the capital, and Shanghai reported a record number of deaths per day over the weekend. The world’s largest importer of crude oil is facing the worst oil demand shock since the early days of the pandemic.
China’s Covid-19 difficulties add another source of volatility to the oil market, which has been rocked by Russia’s invasion of Ukraine. The war has whipped up inflation, and the European Union is discussing measures to curb oil imports from Russia. This can lead to a shrinking market and rising prices.
China has imposed travel bans on a number of cities as it pursues a zero-spread strategy for Covid-19. Residents in the Beijing area were ordered to undergo three days of testing for the virus on Monday to try to quell a wave of cases in the area. Shanghai is entering its fourth week of lockdown.