Breaking News
Get 40% Off 0
Is NVDA a 🟢 buy or 🔴 sell? Unlock Now

Oil Drops as China’s Covid Resurgence Imperils Demand

Published Mar 28, 2022 05:15PM ET Updated Mar 28, 2022 06:18PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. Oil Drops as China’s Covid Resurgence Imperils Demand

(Bloomberg) -- Oil fell as China issued more lockdowns, raising fresh concerns about demand slowing down in the world’s biggest crude importer. 

Futures in New York fell more than $7 to trade near $106 on Monday. Markets sold off after authorities in Shanghai said they will lock down half of the city in turns for mass Covid-19 testing. Prices stayed in retreat even after OPEC+ signaled it’s likely to stick to plans for a modest supply increase when they meet Thursday. 

“China oil demand is approximately 15 million barrels per day,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “The magnitude of sell-off reflects fears that Covid lockdowns in China could spread, significantly impacting demand at a time when the oil market is trying to find alternatives to Russian oil supplies.”

Traders added that in the wake of historic volatility many market participants are just covering their positions, keeping liquidity at the lowest it’s been at in years and leading to outsized moves on any news.

Russia’s invasion of Ukraine continues to disrupt supplies of key commodities, adding to inflationary pressures on the global economy. Despite the day’s sellofff, oil is still heading for a fourth month of gains as a tight market is exacerbated by Russian oil supply getting shunned by buyers. The country’s exports from March 17-23 fell by more than a quarter from the previous week, according to industry data.

On Monday, United Arab Emirates Energy Minister Suhail Al-Mazrouei said additional crude supplies won’t be added if the market is balanced, and resources are in the market.  OPEC+ isn’t focused on whether the specific loss of Russian shipments is causing an imbalance, he added. If not alterations are made, the cartel will ratify an increase of 430,000 barrels a day for the month of May as previously announced.

Demand concerns are starting to emerge with the spread of the virus in China. Shanghai -- a city of 25 million people -- will first lock down areas east of the Huangpu River, which includes its financial district and industrial parks, for four days starting Monday. Then the restrictions will shift to the city’s west for another four days, according to a statement from the local government.

A temporary pause in hostilities by Yemen’s Houthis against Saudi Arabia was also contributing to lower oil prices on Monday. The group’s rebel leader announced a three-day truce on Saturday after an escalation of attacks on the Saudis over the past week, according to a TV report.

The U.S., meanwhile, said reviving a nuclear deal with Iran is not imminent after recent requests from Tehran that included Washington removes the Islamic Revolutionary Guard Corps from its list of terrorist organizations. Iran is an ally of Russia, and its war in Ukraine is also complicating negotiations.

(Corrects the sixth paragraph in the story that originally published at 2:06 p.m. in New York to show OPEC+ is expected to ratify a production increase of 430,000 b/d)

©2022 Bloomberg L.P.

Oil Drops as China’s Covid Resurgence Imperils Demand

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your profile, will be public on and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email