Oil Prices Dip As China’s COVID-19 Lockdowns Reduce Demand

Oil prices are down slightly today (May 16) as ongoing COVID-19 lockdowns in China, the
world’s biggest crude importer, reduce demand.

West Texas Intermediate crude oil, the U.S. standard, fell 0.5% to $109.94 U.S. a barrel, while
Brent crude oil, the international benchmark, declined 0.7% to $110.77 U.S. per barrel.

China’s industrial output and consumer spending slumped in April to the worst levels since the
pandemic began, while apparent oil demand and crude processing plunged. Strict lockdowns in
China to halt the spread of COVID-19 have curbed fuel use in the country.

Shanghai has been one of the hardest hit Chinese cities by COVID-19 restrictions, but there
may be some relief on the horizon. The city reported a second day of no COVID-19 cases
outside quarantine, putting it on the brink of meeting the three days of zero community
transmission required to start easing lockdown measures.

The oil market has been gripped by a tumultuous period of trading since late February due to
China’s virus resurgence and Russia’s invasion of Ukraine.

European Union foreign ministers meet in Brussels, Belgium today to discuss the next round of
Russian sanctions and diplomats have floated the idea of delaying a proposed ban on its oil
imports after objections from Hungary.

German officials have said that country plans to stop importing Russian crude oil by the end of
the year even if the European Union fails to agree on co-ordinated action.