NEW YORK: Oil prices fell about 4 per cent on Monday, with Brent crude tumbling below $100 a barrel on worries that the pandemic will cut demand in China and as International Energy Agency (IEA) countries plan to release record volumes of oil from strategic stocks.
Brent futures fell $4.35, or 4.2pc, to $98.43 a barrel by 1:46 p.m. EDT (1746 GMT), while US West Texas Intermediate (WTI) crude fell $3.75, or 3.8pc, to $94.51.
That put WTI on track to drop to its lowest close since Feb. 25, the day after Russian forces invaded Ukraine, an action Moscow calls a “special military operation.” Brent was on track to fall to its lowest close since March 16.
Fuel consumption in China, the world’s biggest oil importer, has stalled with coronavirus lockdowns in Shanghai, analysts at the Eurasia Group consultancy said.
Shanghai, China’s financial center, started easing lockdowns in some areas on Monday despite reporting a record of more than 25,000 new Covid-19 infections.
“Even when the restrictions in Shanghai are lifted, China’s zero-Covid policies will likely remain a drag on demand,” Eurasia Group said, noting Shanghai lockdowns likely reduced Chinas overall oil consumption by up to 1.3 million barrels per day (bpd).
To help offset a shortfall in Russian crude after Moscow was hit with sanctions, IEA member nations, including the United States, will release 240 million barrels of oil over the next six months.