Oil Plunges to Two-Week Lows as Shanghai Lockdowns Spur Fuel Demand Concerns

Oil prices fell to two-week lows on Monday, continuing losses from the previous week. This comes amid protracted lockdowns in China’s Shanghai and potential aggressive interest rate hikes by the U.S. Federal Reserve aroused investor fears of retreating fuel demand and slowing global economic progress.

According to Reuters, Brent crude futures fell by 3.7% to $102.72 per barrel by 0644 GMT, after sliding to $102.47 during early trade which is its lowest since April 12. The U.S. West Texas Intermediate (WTI) crude futures also plummeted by 3.7% to $98.27 a barrel, after previously dropping to its lowest level since April 12 at $98.05.

Stephen Innes, the Managing Director of SPI Asset Management contended, "Oil is rerating lower due to the China consumption hit while the Federal Reserve is raising interest rates to slow down the US economy."

It comes as Shanghai officials built fences around residences to restrict people indoors amid mounting public uproar as the country battles its worst COVID-19 outbreak since March, 2020. Additionally, Fed Chair Jerome Powell revealed that a half point interest rate hike "will be on the table" at the central bank’s next monetary policy meeting in May.