Sharp drop in oil prices, penalized by internal tensions in China, the world‘s leading importer. The shutdowns related to Xi Jinping’s Zero Covid policies are fueling worries about oil demand. Brent crude recorded a drop of 3.36% to 80.95 dollars a barrel, just above the lows since last January. The WTI is down 3.5% at 73.86 dollars a barrel, after slipping to 73.61 dollars, a level not seen since the end of December 2021.
China’s “Zero Covid” policy unleashes citizens’ anger
Xi’s “zero Covid” strategy, the main source of anger inside the country, seeks to eliminate infections with lockdowns, quarantines and mass testing. Many Chinese cities have been locked down recently due to the growing number of Covid cases. On November 27, more than 40,000 Covid cases were recorded, of which 36,525 were asymptomatic, an increase compared to 39,791 cases (of which 36,082 were asymptomatic) the previous day. This was stated by the Chinese Health Commission. No casualties are reported. Since the start of the pandemic, China has officially recorded just over 5,200 deaths from the virus, far fewer than in other countries.
The rather harsh measures have disrupted the lives and travels of hundreds of millions of people and forced many small businesses to close.
Markets waiting for OPEC
The focus of the markets remains on the next meeting of OPEC and its allies on December 4th. The cartel is expected to make an important decision on oil production. According to rumors from the WSJ, OPEC + would have considered an increase in production. The Kingdom has denied the rumors reported by the Wall Street Journal.