How China’s lockdown brought down the Crude oil prices from a decade high price range
- 31-Mar-2022 11:08 AM
- Journalist: Xiang Hong
Owing to the rising covid cases in China, a lockdown has been initiated in Shanghai which is expected to be the longest lockdown in history, due to which the prices of Crude oil have deescalated globally. As the industry experts were already sceptical about the market scenario after conditions deteriorated between Russia and Ukraine, Crude Oil prices witnessed a windfall with a rekindling concern about the loss of oil demand in the world's largest importer. Russia’s invasion of Ukraine has pushed the prices of several commodities including energy, food, fertilizers, metals, and others, around the globe as the conflict has severely affected the supply chains, disrupting industrial production in Europe.
According to the sources, the prices of Brent crude glided to $112 per barrel in the early hours of Monday, before rebounding somewhat. Meanwhile, a shortage of Russian gas, prompted by traders' reaction to heavy sanctions by the west and their allies against Moscow, provided to keep oil at over $100, which is likely to continue hanging there for the observable future unless there is a change in the sanction regime. As per the report of Wall Street Journal, “we are only beginning to see the first effects of the sanction boomerang now since oil deals cancelled at the start of the Russian invasion of Ukraine would have had delivery dates last week.” The same report cited data from Kpler that mentioned the exports of Russian crude by sea fell to the lowest in eight months during the week to March 25. It also cited data from UBS, which has estimated that the disturbances have affected around 2 million barrels daily of Russian crude.
The Shanghai lockdown is apparently extremely bad news for Russian Crude oil as according to the market expert, Shanghai's lockdown prompted a fresh sell-off from disappointed investors as they expected such a lockdown would be avoided.