The wave of Covid-19 in Shanghai led to a decline in oil prices to its lowest level in two weeks today, Monday, continuing the declines last week, with increasing concern over the prolongation of the closure periods.
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According to Arabiya Net, the authorities in Shanghai erected fences outside residential buildings, which sparked new popular protests. In Beijing, many have started stockpiling food, fearing a similar lockdown after a few cases emerged.
Brent crude fell more than $5, or 5%, to $101 a barrel, its lowest since April 12. While US West Texas Intermediate crude fell $5, or 5%, below $97.
Oil also weakens due to the possibility of higher US interest rates, which boosts the US dollar, as a strong dollar makes commodities priced in it more expensive for other currency holders, and tends to reflect increased risk aversion among investors.
Both oil benchmarks lost nearly 5% last week, on demand concerns, and Brent crude fell sharply after hitting $139, the highest since 2008, last month.
Oil gained support from tight supply, as the Russian invasion of Ukraine reduced supplies due to Western sanctions and customers avoided buying Russian oil, but the market may narrow further with the imposition of a possible European Union ban on Russian crude.
The Times newspaper reported today, Monday, that the European bloc is preparing smart sanctions against Russian oil imports, quoting Executive Vice President of the European Commission Valdis Dombrovskis.
