Oil fell by about 6% as the heavy blockade in China

Label showing crude oil on tank side at Permian Basin in Mentone, Loving County, Texas, USA, November 22, 2019. Image taken on November 22, 2019. REUTERS / Angus Mordant

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  • China’s crude oil imports are rising in April, but demand concerns remain
  • The dollar is at its peak in two decades
  • The EU continues talks on a plan for an embargo on Russian oil
  • Saudi Arabia is cutting crude oil prices in Asia and Europe in June

NEW YORK, May 9 (Reuters) – Oil prices sank about 6 percent on Monday, along with stocks, as the continued blockade over coronavirus in China, China’s largest oil importer, sparked concerns about the prospect of demand.

Brent crude fell $ 6.45, or 5.7 percent, to $ 105.94 a barrel. U.S. West Texas Intermediate fell $ 6.68, or 6.1 percent, to $ 103.09 a barrel. Both contracts have received about 35% so far this year.

Global financial markets are gripped by concerns about rising interest rates and worries about the recession as tighter and broader blockades on COVID-19 in China led to slower export growth in the No. 2 world economy in April. Read more

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“Locks over COVID in China are negatively affecting the oil market, which is selling off along with the shares,” said Andrew Lipow, president of Lipow Oil Associated in Houston.

Imports of crude oil from China in the first four months of 2022 fell 4.8% compared to a year earlier, but imports in April rose by almost 7%. Read more

Chinese imports of Iranian oil in April peaked in 2021 and early 2022 as demand from independent refineries weakened after COVID blockades reduced fuel margins and rising imports of Russian oil at lower prices. Read more

Stock indexes on Wall Street fell, and the dollar reached its two-decade high, making oil more expensive for owners of other currencies.

Saudi Arabia, the world’s largest oil exporter, has lowered crude oil prices for Asia and Europe for June. Read more

In Russia, oil production rose in early May compared to April, and production stabilized, Deputy Prime Minister Alexander Novak said after production fell in April as Western countries imposed sanctions over the Ukrainian crisis.

EU OIL EMBARGO RUSSIA

Last week, the European Commission proposed a gradual embargo on Russian oil, raising Brent and WTI prices for the second week in a row. The proposal requires a unanimous vote by EU members this week to pass.

The European Commission is considering offering more money to upgrade eastern European Union countries to upgrade oil infrastructure in a bid to persuade them to agree, an EU source told Reuters. Read more

“EU oil embargo to boost seismic shift in European and global crude oil markets, which Rystad Energy expects EU oil imports from Russia could cut by as much as 3.0 million bpd (barrels per day) by December 2022 policy implementation, ”said Bjørnar Tonhaugen, head of oil market research at Rystad Energy.

German officials are silently preparing for any sudden disruption to Russian gas supplies with an emergency package that could include taking control of critical companies, three people familiar with the matter told Reuters. Read more

Japan, the five largest importers of crude oil, will ban the import of Russian crude “in principle,” Prime Minister Fumio Kishida said, adding that it would take time. Read more

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Reporting by Stephanie Kelly; additional reports by Shadia Nasralle and Florence Tan; edited by David Evans, David Gregorio and Marguerita Choy

Our standards: Thomson Reuters’ principles of trust.

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