© Archyde.com. An oil pump in California, USA – Photo from Archyde.com archive.
(Archyde.com) – About 6 percent plunged on Monday on growing concern regarding the outlook for demand as coronavirus-related shutdowns persisted in China, the world’s largest importer of crude.
Global benchmark crude contracts ended the trading session as low as $6.45, or 5.7 percent, to record at a settlement of $105.94 a barrel.
US West Texas Intermediate crude contracts fell $6.68, or 6.1 percent, to settle at $103.09 a barrel.
The two benchmarks are still up regarding 35 percent so far this year.
Global financial markets are witnessing a wave of panic over interest rate increases and fears of a recession, while tighter and broader shutdowns to contain Covid-19 in China slowed export growth in the world’s second largest economy in April.
“The Covid shutdowns in China are having a negative impact on the oil market, which is experiencing a sell-off in tandem with equity markets,” said Andrew Lipow, president of Lipow Oil Associates in Houston.
China’s crude imports fell 4.8 percent in the first four months of 2022 compared to the same period last year, but imports in April rose regarding 7 percent.
China’s imports of Iranian oil in April fell from the peaks recorded in late 2021 and early 2022, as demand from independent refiners declined following the Covid closures due to increased imports of cheaper Russian crude.
US stock indices fell on Wall Street and reached their highest levels in two decades, which makes oil priced in the green currency more expensive for holders of other currencies.
Saudi Arabia, the world’s largest oil exporter, cut crude prices to Asia and Europe for the month of June.
In Russia, Deputy Prime Minister Alexander Novak said the country’s oil production in early May had risen above April levels following facing negative effects from Western sanctions on Moscow over its invasion of Ukraine.
(Prepared by Wagdy Al-Alfi for the Arabic Bulletin)
