[Asia Economy Reporter Cho Hyun-ui] As China, the world's largest crude oil importer, has entered partial lockdowns in the capital Beijing following Shanghai due to the spread of COVID-19, concerns over demand reduction have caused international crude oil prices and raw material prices such as iron ore to fall consecutively.
According to Bloomberg News on the 25th, as of 3:49 PM Korea time, West Texas Intermediate (WTI) crude oil futures on the New York Mercantile Exchange fell 4.01% from the previous session to $97.98 per barrel.
Bloomberg explained, "International crude oil prices are showing weakness due to concerns that oil demand will decrease amid the spread of COVID-19 in China."
In Shanghai, COVID-19 deaths reached a record high last weekend, and infections surged in Beijing as well, prompting Beijing authorities to conduct mass testing of residents and effectively impose lockdown measures on Chaoyang District, home to 3.5 million people.
A source familiar with China's energy situation predicted, "Demand for gasoline, diesel, and jet fuel in China will sharply decline by 20% compared to the same month last year." This corresponds to a daily decrease of 1.2 million barrels in crude oil terms.
This explains how China's COVID-19 crisis is further increasing the volatility of international crude oil prices, which have been fluctuating due to the Russia-Ukraine war.
There is room for increased supply in the oil market, suggesting the possibility of further declines in international crude oil prices. Libya is expected to resume production at oil fields that were shut down within the next few days, and some facilities at Russia's Black Sea oil export terminals, damaged by storms last month, have been repaired and returned to normal operation.
However, Bloomberg added, "The European Union (EU) is considering banning imports of Russian crude oil, which could trigger a rise in international crude oil prices in the future."
On the same day, iron ore prices in the Chinese futures market plunged 7.6%, along with declines in metal prices such as nickel (-6.2%), aluminum (-4.7%), and copper (-1.4%). Concerns over weak demand due to the spread of COVID-19 fueled the price declines.
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