Crude oil futures closed lower on Monday (March 28) after China announced a lockdown of Shanghai to contain the spread of the coronavirus. The move has raised fears among investors that it will hurt oil demand from China, the world’s largest crude importer.
- WTI crude futures fell $7.94, or 7%, at $105.96 a barrel.
- BRENT crude futures fell $8.17, or 6.8%, at $112.48 a barrel.
The city of Shanghai, China’s financial center, has announced lockdown measures to contain the spread of COVID-19. The lockdown will be divided into two sections and will begin on March 28 and end on April 5.
Officials in Shanghai said that while this lockdown measure is enforced, people will be instructed not to leave their homes. Public transportation will also be suspended. Businesses will be ordered to close their operations or have their employees work from home. Stores that provide the public with everyday goods are exempt but must remain open under supervision.
The price of crude oil has also fallen as the European Union cannot agree on plans for Russian oil sanctions. Too many EU members are highly dependent on Russian energy products. Among them are Germany or Italy.
In addition, it was reported that the Caspian Pipeline Consortium (CPC) has begun to resume some of its oil exports. Previously, exports had been halted due to storm damage.
Meanwhile, U.S. National Security Advisor Jake Sullivan said that the United States and its allies have made progress in negotiating the nuclear agreement with Iran. If such an agreement is reached, it will allow Iran to put oil back on the market.
Investors are watching the March 31 meeting of OPEC and OPEC+, where OPEC+ is expected to stick to the original agreement. Accordingly, it will increase oil production by only 400,000 barrels per day in May.
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Tuesday, March 29, 2022