Oil dropped nearly 5 per cent on Monday to its lowest in almost two weeks, as demand concerns grew because of strict Covid-19 movement restrictions in China, the world’s biggest importer of oil, and potential US rate hikes that could affect economic growth and crude consumption globally.
Brent, the global benchmark for two thirds of the world's oil, was trading 4.30 per cent lower at $102.06 per barrel at 2.57pm UAE time on Monday, while West Texas Intermediate, the gauge that tracks US crude, slipped below $100 and was down 4.39 per cent, at $97.59 a barrel.
“Oil prices are in a sharp decline mainly due to growth concerns,” said Naeem Aslam, chief market analyst at Avatrade.
“It seems that a lot of hot air is coming out of the oil rally that we experienced in the past weeks and now the uptrend is facing a major threat.”
China, the world’s second-largest economy, is experiencing a wave of Covid-19 infections and has introduced strict movement curbs in Shanghai, its largest city, to control the spread of the pandemic. New cases have also been detected in China’s capital Beijing as the government continues to carry out mass testing to isolate every infected person as part of its “zero-Covid” strategy.