Oil prices fell on Monday trading after China, the world’s largest crude importer and second-biggest economy, reiterated its commitment to its zero-Covid policy, which has weighed on oil demand.
Brent, the benchmark for two thirds of the world’s oil, was 1.3 per cent lower at $97.29 a barrel at 11.37am UAE time. West Texas Intermediate, the gauge that tracks US crude, was down 1.59 per cent at $91.14 a barrel.
But a China National Health Commission representative stressed in a press conference on Saturday that the country will soldier on with its strict measures, dashing hopes of a rebound in oil demand in the world’s second-largest economy.
“The gain in oil markets shows how sensitive they are to any indication of China opening up more of its economy,” Edward Bell, senior director of market economics at Emirates NBD, said in a research note.
China imported 40.24 million tonnes of crude oil, or about 9.79 million barrels per day, in September.
Crude shipments were up from 9.5 million bpd in August, but were well below the 10 million bpd China imported a year earlier, data from the country’s General Administration of Customs showed last month.
An EU embargo on Russian crude oil and product imports that comes into effect in December 2022 and February 2023, respectively, is expected to result in significant declines in Russian crude output.
Russia, which will continue exporting crude to some European countries after the ban, will still need to find a new market for more than 1 million barrels per day of crude by December, according to analysts.