Lockdown in China Makes Crude Oil Prices Sliding

JAKARTA, KOMPAS.com – Price oil World crude oil continued to decline in trading today, Monday (4/4/2022) triggered by the worsening of the Covid-19 case in China. Besides that, oil prices also weighed down by the prospect of additional stocks from the United States (US) oil reserves.

Quoting Bloomberg data, at 07.25 WIB crude oil prices Brent futures were observed to fall 0.74 percent to at the level of 103.65 US dollars per barrel.

Temporary price crude oil US West Texas Intermediate (WTI) fell 0.86 percent to 98.41 US dollars per barrel, after falling 13 percent last week.

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Currently, China is grappling with the corona virus outbreak, which has now penetrated 13,000 Covid-19 cases per day. The Chinese government implemented a lockdown policy in several cities in the country, including Shanghai, which resulted in a decline in oil demand.

Shanghai is a central business city with 25 million people who account for about 4 percent of China’s oil consumption. China is the world’s largest importer of crude oil and the second largest consumer after the United States.

Benchmark US WTI crude prices also fell sharply in the last two years in trading last week, after US President Joe Biden announced he would release oil reserves of 1 million barrels of oil per day.

This was indeed done to suppress energy prices which continued to soar after the Russian invasion of Ukraine. On the other hand, traders also expect nuclear talks between the US and Ukraine to be close to an agreement.

The talks could lead to sanctions relief on Iran’s oil production. If an agreement is reached, it is possible that there will be additional oil supplies from Iran in the global market.

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