Crude oil opened lower on Monday as citizens of the world’s largest importer of the commodity, China protested over tough COVID-19 restrictions.
Brent crude oil, the international benchmark for oil Nigerian oil, declined by $2.16, or 2.6% to $81.47 a barrel during the Asian trading session after previously hitting $81.16 per barrel.
U.S. West Texas Intermediate (WTI) crude oil also dipped by $2.08, or 2.7% to $74.20 per barrel, paring losses from $73.
Last week, Brent crude oil lost 4.6%, its 10-month low while the WTI closed 4.7% lower as global uncertainty continues to dictate commodity prices.
“On top of growing concerns about weaker fuel demand in China due to a surge in COVID-19 cases, political uncertainty, caused by rare protests over the government’s stringent COVID restrictions in Shanghai, prompted selling,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.
WTI’s trading range is expected to fall to $70-$75, he said, adding the market could stay volatile depending on the outcome of the OPEC+ meeting and the price cap on Russian oil.
China, the world’s top oil importer, has stuck with President Xi Jinping’s zero-COVID policy even as much of the world has lifted most restrictions.
Hundreds of demonstrators and police clashed in Shanghai on Sunday night as protests over China’s strict COVID restrictions flared for a third day and spread to several cities in the wake of a deadly fire in the country’s far west.
The wave of civil disobedience is unprecedented in mainland China since Xi assumed power a decade ago, as frustration mounts over his zero-COVID policy nearly three years into the pandemic.
“Bearish sentiment is growing in the oil market with mounting concerns over demand in China and a lack of clear signs from oil producers to further cut output,” said Tetsu Emori, CEO of Emori Fund Management Inc.
“Unless OPEC+ agrees on a further reduction of production quota or the United States moves to reload its strategic petroleum reserves, oil prices may be headed further down,” he said.
The Organization of the Petroleum Exporting Countries and allies, known as OPEC+, will meet on Dec. 4.
