By Adedapo Adesanya
Crude oil prices slid more than 5 per cent as new COVID-19 lockdowns emerged in China amid talks between Russia and Ukraine.
The global benchmark crude, Brent crude, lost 5.84 per cent or $6.58 to sell at $106.10 per barrel, while the US West Texas Intermediate (WTI) went down by 6.56 per cent or $7.17 to trade at $102.20 per barrel.
Russia and Ukraine were slated to resume peace talks after the former invaded the latter, prompting fears that supply would be disrupted in what was already a tight market.
Russian and Ukrainian delegations held the fourth round of talks on Monday – by video link rather than in person in neighbouring Belarus as in the past – but no new progress was announced.
Ukraine said it held the talks with Russia on a ceasefire, immediate withdrawal of troops and security guarantees despite the fatal shelling of a residential building in the capital city Kyiv, according to reports.
But prices were heavily impacted as China locked down several cities because of a fresh surge in COVID cases.
After largely remaining on the sidelines of the newsflow over the past month, COVID again returned to make headlines in China, where it originated.
China, which is the world’s most populous country, locked down all 17.5 million residents in the business hub of Shenzhen and limited bus services to Shanghai after COVID cases spiked over the past few days.
Analysts noted that a renewed COVID outbreak in China is leading to rising shutdowns as Omicron spreads rapidly, which could reduce global energy demand since China is the world’s largest importer of oil, liquefied natural gas and coal.
Meanwhile, the European Union member states have agreed on the fourth package of sanctions against Russia but it does not include energy exports which the continent is largely dependent on.
The United States has banned Russian oil imports and the United Kingdom said it would phase them out by the end of 2022.
Prices may yet return to bullish territories after Iranian nuclear talks were paused on Friday. An agreement with Iran could add another 1 million barrels per day of oil supply to the market, but that would not be enough to offset declining supply from Russia.
Modupe Gbadeyanka