Oil prices sink more than 5% on China demand fears

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Aerial view of the Floating Production Storage and Offloading Vessel (FSPO) “Cidade de Itaguai” oil platform, operating at Santos basin exploration unit of Pre-Salt in Itaguai, about 150 miles (240 km) off the coast of Rio de Janeiro, Brazil on November 10, 2017. – Anchored in water 7,350 feet (2,240 meters) deep, the “Cidade de Itaguai” platform defies nature’s most primal forces — and what until recently were considered humankind’s own limitations. These so-called pre-salt fields contain vast crude oil reserves but at incredibly hard to access depths, requiring a combination of high-tech and simpler things, like extremely long, strong pipes. The oil platform is operated by Brazilian oil company Petrobras and Japanese oil company Modec. (Photo by MAURO PIMENTEL / AFP)

 

LONDON, United Kingdom (AFP) — World oil prices sank more than five percent Monday on fears that China’s worsening Covid outbreak could slam demand from the major energy consumer.

Europe’s benchmark contract Brent North Sea crude fell as low as $101.20 per barrel and US WTI oil dropped to $96.85.

China is struggling to get a grip on a renewed Covid outbreak that has forced Shanghai — the country’s biggest city — into lockdown and dealt a blow to energy demand.

A health worker takes swab sample on a woman to be tested for Covid-19 coronavirus at a swab collection site along a street in Beijing on April 25, 2022. (Photo by Noel Celis / AFP)

Global markets have also been stung by the prospect of a sharp increase in US interest rates.

“Market moods have deteriorated as the Covid situation in China is not improving and the media is hinting that Beijing could be next in line for a lockdown after Shanghai and several other major cities,” said XTB analyst Walid Koudmani.

“As China is the second largest economy in the world, the situation … has a big impact on commodity markets with oil and industrial metals dropping significantly.”

© Agence France-Presse