Today, West Texas Intermediate closed the day with yet another price drop. Oil prices on the exchange now hover just over $100 a barrel, while Brent Crude remains unchanged from yesterday at just over $112.
Both prices are down from this month’s high of $130, set just after the start of Russian hostilities in Ukraine and a Houthi attack on oil facilities operated by Saudi Aramco, located in the Saudi Arabian port city of Jeddah.
Sources point to falling demand from China, the world’s largest importer of crude oil, as the primary cause of the price drops.
The country is currently dealing with yet another COVID-19 related lockdown in Shanghai due to a surge in confirmed cases of the new Omicron BA.2 variant. This news comes after China’s government ended another week-long lockdown in the city of Shenzhen on Sunday night.
China’s “Zero COVID” approach to containing the virus thus far has been largely successful. The Chinese economy had recovered relatively quickly after the chaos of the original outbreak back in 2020. They have been implementing a policy of swift regional lockdowns and mandatory COVID testing to prevent the virus from spreading out of control.
The number of confirmed COVID cases in China is currently more than 62,000 across all of its thirty-one provinces as of Monday, most of them infected with the BA.2 Omicron variant. However, mutations found in this new COVID variant have made the virus more contagious and more challenging to identify than the original Omicron variant, which could potentially push this number up at any time.
Because of this, Chinese officials have dubbed this new strain the “stealth Omicron variant.” Businesses across China are urged to report all losses brought about by the lockdowns to district governments so that they can prepare plans for a potential stimulus.
Elsewhere, Western markets continue to reduce or eliminate dependence on Russian oil due to Russia’s unprovoked attack on Ukraine. The attack has severely damaged Russian relations with many Western nations, which have pledged to refuse imports of Russian oil.
Russian oil exports to countries like China and India have been at their highest levels in the past two years. Despite this, however, Russian oil exports have fallen more than 26% from pre-war levels, according to data obtained by Bloomberg.
