Most read from Bloomberg Futures contracts in New York fell more than $ 9 and traded close to $ 105 on Monday. The markets sold out after authorities in Shanghai said they would lock half the city in rotation for mass Covid-19 tests. Traders fear that lockdowns could affect the prospects for global crude demand. Risks of global growth from inflation and tightening monetary policy have also hit the market climate, pushing government bonds lower earlier. “Oil demand in China is about 15 million barrels a day,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “The magnitude of the sell-off reflects fears that Covid lockdowns in China could spread, significantly affecting demand at a time when the oil market is trying to find alternatives to Russian oil supplies.” Russia’s invasion of Ukraine continues to disrupt commodity supplies, adding to inflationary pressures on the world economy. Oil is heading for a fourth month of profits as the narrow market is exacerbated by the avoidance of Russian oil supply by buyers. The country’s exports from March 17 to 23 fell by more than a quarter compared to the previous week, according to industry data. Some Russian crude finds its way to Asia. Exports to the East of some grades from Baltic and Black Sea ports rose to a two-year high in the first 23 days of March, according to Vortexa Ltd. Moscow is still able to sell its crude due to price cuts and aims to keep production stable even in the midst of unprecedented sanctions, Deputy Prime Minister Alexander Novak said last week. The story goes on Concerns about demand are beginning to emerge as the virus spreads to China. Shanghai – a city of 25 million – will first lock areas east of the Huangpu River, which includes its financial district and industrial parks, for four days from Monday. The restrictions will then be moved west of the city for another four days, according to a local government announcement. A temporary cessation of hostilities by Yemen’s Houthis against Saudi Arabia also helped reduce oil prices on Monday, Staunovo said. The group’s rebel leader announced a three-day ceasefire on Saturday following an escalation of attacks on Saudis last week, according to a television report. The United States, meanwhile, has said a resumption of a nuclear deal with Iran is not imminent following recent demands by Tehran to remove the Islamic Revolutionary Guard Corps from the list of terrorist organizations. Iran is an ally of Russia and its war in Ukraine also complicates negotiations. Most read by Bloomberg Businessweek © 2022 Bloomberg LP
