The price of Brent crude oil has fallen by nearly 3% in Asian trade on Monday morning to around 81 dollars a barrel. This is the lowest Brent crude price since the beginning of the year and is mainly due to protests in China over strict COVID-19 restrictions.
These are fuelling concerns over weakening demand in the world’s top oil importer.
Oil prices may stay lower for longer, unless there is a cut in production or the United States steps up its buying of oil in order to replenish its strategic oil reserves.
Fears about Chinese economic growth also hit commodities in Asia trade.
US crude dipped 2.81% to $74.14 a barrel.
The COVID rules and resulting protests are creating fears the economic hit for China will be greater than expected.
“Even if China is on a path to eventually move away from its zero-COVID approach, the low level of vaccination among the elderly means the exit is likely to be slow and possibly disorderly,” CBA analysts said on Monday.
“The economic impacts are unlikely to be small.” – Additional reporting by Reuters