Strengthened Lockdown in Zhong Leads to Oil Price Decline... WTI Falls Below $100 Mark

[Asia Economy New York=Special Correspondent Joselgina] As China prolonged lockdown measures to curb the spread of COVID-19, international oil prices fell below $100.

On the 25th (local time), the June West Texas Intermediate (WTI) crude oil price on the New York Mercantile Exchange closed at $98.54 per barrel, down $3.53 (3.5%) from the previous session. This is the lowest closing price since April 11. During the session, WTI even slipped to around $95 per barrel.

At 8:19 a.m. local time on the London ICE Futures Exchange, Brent crude was trading down 3.56% at $102.83 per barrel.

This is interpreted as a consequence of growing concerns over demand from China due to economic recession fears, as China imposed COVID-19 lockdown measures not only in Shanghai but also in some areas of Beijing.

Jeffrey Halley, an analyst at OANDA, said, "China is the 'elephant in the room,'" adding, "The intensified lockdown in Shanghai and fears of Omicron spreading in Beijing unsettled market sentiment today." The "elephant in the room" refers to a major issue that no one wants to mention first due to the risks it might cause.

Fiona Cincotta, an analyst at City Index, also said, "Shanghai shows no signs of abandoning its strict zero-COVID policy," adding, "Oil demand could worsen further." The US dollar is also strengthening amid rising expectations of interest rate hikes, putting additional pressure on oil prices.