China’s lockdowns put pressure on oil prices

Crude futures closed down more than 3% on Thursday as investors worried that China’s imposition of lockdowns on major cities to curb the spread of the coronavirus would lead to a slowdown in economic activity and oil demand.

  • WTI crude futures fell $2.94, or 3.3%, at $86.61 a barrel.
  • BRENT crude futures fell $3.28, or 3.4%, at $92.36 a barrel.

The city of Guangzhou in southern China has announced measures to contain the spread of COVID-19. As the city of Shenzhen, it has ordered several parts of the area to contain the outbreak. This has raised concerns that the measures will affect the economy and people’s lives in the two cities, which are China’s main economic centers.

The Guangzhou Municipal Government has ordered the cessation of indoor entertainment activities and banned eating in restaurants in some districts. In Shenzhen, at least four districts, home to some 9 million people, have also been ordered to close entertainment stores and ban eating in restaurants.

Chengdu has also imposed lockdowns in several areas and is expected to affect companies that have set up shop in the city, including Toyota Motor and Foxconn, which makes iPhones for Apple Inc.

The market was also pressured by forecasts of possible progress in talks on the Iranian nuclear agreement. This would allow Iran to resume exporting oil to the world market.

French President Emmanuel Macron expressed hope that talks on the Iran nuclear deal could be concluded within days. John Kirby, the spokesman for the White House National Security Council, said the U.S. hoped to revive the nuclear agreement with Iran and was confident it could negotiate such issues.

Investors are waiting for the OPEC and OPEC+ meeting on September 5 and expect OPEC+ to announce production cuts at that meeting to support market prices.

The Spot Market is Open

Friday, September 2, 2022

Energy
Updated at
USD
Price

Change

%Change
Crude Oil
10.55

88.36

+1.75

+2.02%

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