Oil price tumbles as China’s Covid-19 control, and interest rate hikes hurt demand growth

Oil prices fell in Asian trading Monday (Sept. 12) as the prospect of interest rate hikes in the U.S. and Europe continues to dampen inflation, and COVID-19 tightening in China will overshadow global demand trends.

  • Brent crude futures fell 78 cents, or 0.9%, to $86.01 a barrel.
  • WTI crude futures were at $92.11 a barrel, down 73 cents, or 0.8%.

The price has changed slightly over the past week. This is due to the fact that the gains from the minor supply cuts by OPEC and OPEC+ are offset by the ongoing lockdowns in China, the world’s largest importer of crude oil.

China’s oil demand may shrink this year for the first time in 20 years as Beijing’s coronavirus-free policy keeps people at home during the long holidays and reduces fuel consumption.

An analyst at Commonwealth Bank of Australia said, “Demand concerns centered on the impact of interest rate hikes to combat China’s inflation and coronavirus-free policies.”

The European Central Bank and the U.S. Federal Reserve (Fed) will continue to raise interest rates to fight inflation, which could increase the value of the U.S. dollar against various currencies. This will make dollar-denominated oil more expensive for investors.

World oil prices could recover at the end of the year. Supply is expected to tighten further when the EU ban on Russian oil exports comes into force on December 5.

The G7 countries will limit Russia’s lucrative oil export revenues by imposing restrictions on Russian oil prices following its invasion of Ukraine in February.

The Spot Market is Open

Monday, September 12, 2022

Energy
Updated at
USD
Price

Change

%Change
Crude Oil
10.50

85.43

-1.36

-1.57%

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